His words during the testimony later inadvertently caused shares of Google’s parent company, Alphabet Inc, to slide about 9% on May 7.
This was mainly attributed to investors’ concerns over Google’s ability to remain a dominant force in the search engine scene with the rise in AI-powered search engines.
While acknowledging investors’ concerns, OCBC’s equity research team believes that concerns were ‘overblown’ in their report published on May 8.
“Alphabet dominates the online search market, with Google capturing over 90% of the global share and over 80% of the US share. We expect Google to maintain its leadership position in the search space,” OCBC states.
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The report cites that while Apple can onboard more search engine options as they previously have done, many have overlooked Cue’s comment that he still believes Google should still remain the default option in Safari still.
“In our view, AI providers have improved their offerings over the years, but Google has also been actively responding and it still remains to be seen if commercial query behaviour pivots away from Google significantly in the near term towards these other AI-based providers,” the report states.
Furthermore, third party research also suggests that Safari is instead losing share to Google Chrome as usage of the Google app has been increasing on iOS.
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Alphabet’s revenue from Search grew 9.8% year-on-year to US$50.7 billion ($65.80 billion) according to their 1Q25 results released on Apr 24.
In addition, Google also recently put out a statement stating that they continue to see overall query growth on their search engine that includes an increase in total queries coming from Apple’s devices and platforms.
Lastly, OCBC believes that given Apple’s existing revenue sharing agreement with Alphabet with Alphabet receiving about US$20 billion annually, it is only natural for Apple to put the threat of AI-powered search engines towards Google’s dominant position in the spotlight.
“We believe that the current knee-jerk sell-off is overdone, with valuations now close to the 5-year low. We will be looking towards Google’s upcoming I/O developer conference event for further evidence of continued AI and product innovations ahead that can help Alphabet address investors’ concerns,” OCBC states.
OCBC reiterated their ‘buy’ rating on Alphabet, maintaining its target price (TP) of US$210 unchanged from its previous report on April 25. That said, the prior report saw OCBC slash its target price from US$233 previously.
