Google’s Stock Plummets Over 7% Amid Market Concerns
Internet giant Google (Alphabet Inc.) recently experienced a significant decline in its stock price, falling over 7% in a single day, sparking heated discussions in the market. As AI products rapidly replace traditional search engines, heavy pressure is mounting on Google’s core business. The company appears to be entering a critical transformation period, facing challenges such as declining search advertising revenue, lagging AI technology, and sluggish performance in the hardware and cloud markets.
Shaky Search Dominance: AI Tools Rewriting User Habits
According to a report by Bloomberg, Google’s (stock code: GOOG) search business, which has been its lifeline, is facing unprecedented challenges. With the rise of AI tools like ChatGPT and Perplexity, an increasing number of users are no longer relying on traditional search engines:
Apple is considering integrating an AI search engine into Safari, potentially replacing Google Search, which could end Google’s $20 billion annual default browser contract, directly threatening its search advertising empire.
However, Google has not been idle in integrating AI into its search engine; last month, the highly publicized AI Overviews feature aimed to provide users with real-time search summaries to enhance the search experience. Nevertheless, this feature has severely impacted small and medium-sized websites and content creators that rely on search and direct traffic.
Ad Revenue Dwindling: Losing Search = Losing Revenue Stream
X user @realpeteyb123 pointed out that over 73% of Google Ads’ revenue in 2023 came from search-related businesses, totaling $239 billion. Now, AI tools are enabling users to bypass search pages, leading to decreased ad exposure and conversion rates. If search traffic continues to decline, Google’s advertising business may face structural shrinkage.
@realpeteyb123 bluntly stated: “If you lose the search business, what does Google have left?”
Cloud Services Struggling Against Amazon and Microsoft: Google Cloud’s Market Share Lags
Furthermore, even though cloud services are seen as a new hope for Google’s revenue expansion, data indicates that Google Cloud currently holds only about 10% of the global market, far behind Amazon AWS (33%) and Microsoft Azure (25%):
Despite rapid revenue growth, Google Cloud remains weak in enterprise adoption rates and tool integration, failing to become a pillar capable of replacing search revenues.
Gemini Struggling to Compete with ChatGPT and Grok
Even more concerning is Google’s performance in the current LLM-dominated AI field, with several testing reports indicating that Google’s Gemini AI lags behind ChatGPT and Grok, led by Elon Musk, in conversational ability, creative expression, and logical reasoning. @realpeteyb123 emphasized:
Google has fallen significantly behind in the AI competition, unable to keep pace with other market leaders. Poor user experience and unstable model responses have left the slower-starting Google on the sidelines in this AI revolution.
Hardware Struggles: Weak Presence of Pixel, Limited Android Profitability
Finally, in terms of hardware, Google Pixel phones have consistently failed to achieve a significant breakthrough in global market share, struggling to compete with mobile giants like Apple and Samsung. Even though the Android system is widely adopted, its business model relies on OEM manufacturers, failing to generate significant profits for Google.
Can Google Rebirth in the AI Era?
Google has always prided itself on innovation, but it seems to have missed the opportunity in the AI era. From the shaking foundations of its search engine to insufficient competitiveness in AI, slow progress in hardware and cloud services, these issues pose an all-encompassing challenge to its business model. As @realpeteyb123 described:
Once stripped of search dominance, what remains is a bloated company with outdated products, inflated valuations, and no clear future direction. This is an investment target of the baby boomers that has lost its appeal.
Certainly, Google will continue to exist in the next decade, but “still existing” is not the same as “having a bright investment outlook.” If it cannot quickly break through existing bottlenecks and redefine its positioning or transform itself, Google’s future may not be so optimistic.
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