Alphabet Stock Crashed 7% in a Day—Is AI Killing Google Search?

Alphabet stock fell 7% on 7 May 2025—not because of earnings, but because of a remark by an Apple executive. What could he have said to trigger such a reaction?

Eddy Cue, Apple’s SVP of Services, testified that Google search volume on Safari had declined “for the first time in 22 years.” He attributed this to users shifting to AI tools like ChatGPT, Perplexity, and Gemini. In short, he hinted that AI is reshaping how we search—and potentially undermining Google’s dominance for good.

Given that Search is Alphabet’s core revenue engine, this comment spooked the market. Fewer users on Google means fewer ad impressions. And fewer impressions mean lower ad revenue—plain and simple.

Google Still Dominates—and Is Still Growing

This isn’t the first time we’ve heard that Google Search is under existential threat. When ChatGPT first launched, and Microsoft quickly integrated it into Bing, many wondered if Google’s reign would end. But the buzz faded. Today, Bing remains a distant second.

Just look at Statcounter’s April 2025 data: Google commands 89.66% market share while Bing trails far behind at 3.88%.

Some critics are pointing out that Google’s share dipped below 90%, down from 90.91% a year ago. But that’s hardly a collapse. If anything, it shows a maturing market with new tools nibbling at the edges.

What’s more important is the actual volume of searches. In 2024, Google Search volume grew 21.6% year-on-year. And revenue grew with it—13% in 2024, and another 10% in Q1 2025. So while market share may inch down, the overall pie is getting bigger—and Google’s slice is still massive.

AI Search Is Real—and Growing

Still, it’s undeniable: AI tools are changing how people search.

Among AI chatbots, ChatGPT is the undisputed leader—not just as a model, but as a consumer product with mass adoption. In April 2025, it held 84.21% market share among AI chatbots, according to Statcounter.

Many users now turn to AI chat for answers. Most chatbots even have a built-in ‘search’ function that pulls information from the web automatically. This means Google Search loses some of these queries. OpenAI CEO Sam Altman even said, “I don’t do Google searches anymore”—though to be fair, he has every reason to say that.

The shift is most pronounced among younger and tech-savvy users. One survey found that 27% of U.S. respondents already prefer AI tools over traditional search. Gartner predicts AI could handle 30–50% of all search queries by the late 2020s.

That said, there’s still a huge gap. ChatGPT processes around 37.5 million “search-like” prompts per day. Google? About 14 billion. AI search has momentum, but it has a long way to go.

Google Isn’t Standing Still

Google isn’t letting AI search erode its turf without a fight.

If you’ve searched on Google recently, you might have noticed an “AI Overview” at the top of your results. Instead of just listing links and ads, Google now summarizes information directly to answer your question.

Alphabet CEO Sundar Pichai and Search VP Robby Stein say these summaries are driving more engagement—not less. Their internal data suggests users are performing even more searches thanks to AI Overviews.

But this creates a new dilemma: if users get their answers directly from Google’s AI, will they still click on links—or ads?

That’s the billion-dollar question. Google can’t afford to boost engagement at the expense of ad revenue. One potential solution? Monetize the AI Overviews themselves. Google has hinted at placing sponsored links within these summaries. Pichai believes AI will ultimately enable more precise, effective ad placements.

If they pull that off, Google could maintain its search dominance while evolving its business model.

Alphabet Still Belongs in Portfolios

In my view, it’s premature to write off Alphabet. Search is still dominant. Ad revenue is still growing. And Google is actively adapting to the AI era.

More importantly, the stock looks reasonably priced. Alphabet trades at 17x earnings, compared to its 5-year average of 26x. That suggests a discount despite solid fundamentals and an AI roadmap.

We should keep an eye on how well Google integrates ads into AI search. But for now, Alphabet remains a relevant—and arguably undervalued—tech giant.