The 1 -Billion problem from Google: stock, to fall by 40%?

Google's share fell on Wednesday, May 7, 2025, the largest individual day of the year, the year-ended by Apple's comments. In a Bloomberg report, Apple Services Head Eddy Cues has shown that AI-powered search engines aim to replace conventional search engines such as Google. This news sent a tremor through the market and underlines the fear of investors in relation to a possible disturbance of Google's basic search transaction. This tells them how sensitive investors are a terrible idea: The search is no longer inviolable.

A tear in the core

What happens to Alphabet when the search no longer dominates? Could we look at a scenario in which the existence of the Tech giant faces? A potential 40% disadvantage? Let us go down with the underlying factors to understand this potential scenario.

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Google's business model: The Search Perium

Alphabet's business is fundamentally about its search dominance. About 76% of Alphabet's sales come from advertising, which corresponds to $ 265 billion of US $ 350 billion in total sales of $ 265 billion. This breaks on:

• Google Search & other: 198 billion US dollars (main contribution to display)
• YouTube ads: ~ 36 billion US dollars
• Google Network: ~ 30 billion US dollars

The search is not just a source of income. It is the Crown Jewel that finances everything else in the Alphabet Ecosystem, from Waymo to Google Cloud and countless moon bulb projects. The problem is simple: if the search gets to stall, the entire house of cards could collapse.

The evaluation system: How the market prices google today Google today

Alphabet currently has impressive market metrics:

• Market capitalization: ~ 2.0 trillion US dollars
• After twelve months P/E: ~ 17x
• Enterprise Value/EBITDA: ~ 14x
• Free cash flow return: ~ 3.8%

These multiple exist mainly because investors believe in the durability of the Google search monopoly and its consistent growth structures. However, these assumptions rest on increasingly shaky soil. If the growth slows down or slows down the margin compress, the math assessment changes dramatically – and not in favor of Google.

Apple's AI threat: a real fault signal

Apple's latest focus on AI integration is not just another routine tech announcement. It indicates a fundamental change in access to information. Due to the profound embedding of siri and chatt-like AI functions directly within IOS, Apple demands a direct route for users to obtain information and possibly bypass Google overall.

Consider the following: If users can easily get answers from the blocking screen of your iPhone or via Siri without opening a browser, the role of Google is significantly reduced in the information access process. This threat is not isolated. Simultaneous progress in platforms such as chatt, confusion AI and Bing Copilot from Microsoft also create alternative ways to recognize information.

The most immediate and most concerned episode for Google is the potential for a decline in the recommendations from iPhones. This effect could realistically start to materialize itself in the next 12 to 24 months.

What if the Google search decreases? A stress test analysis

Income impact:

Let us consider a stress test scenario in which the AI ​​disorder leads to a decline in Google search income by 15 to 20% over the next 2 to 3 years. This would lead to a significant annual reduction in sales of 40 to 60 billion US dollars for alphabet. At the same time, alphabet to stay competitive in the AI ​​landscape is probably exposed to increasing infrastructure costs, especially for TPUs and inference. This combination of reduced sales and higher costs could compress Alphabet's operating margins from 32% to around 26% reduced profit margins.

Evaluation effects:

However, the significant impact could be due to the evaluation compression. If the perception of the market is shifted and the search no longer sees as invulnerable business, the price-performance ratio of Alphabet (P/E) from Alphabet could work together from its current 17-fold to approximately 12x-14x. If this P/E compression is linked to lower profits due to the decline in sales and the back of the margin, the total potential for the shares of alphabet is between 35% and 40%.

Market perception and value nose:

Before an actual financial collapse occurs, a change in the market mood in relation to the untouchable could lead to a significant erosion of the market capitalization of alphabet. A decrease of 35 to 40% would correspond to a potential loss of around $ 800 billion to the company's assessment.

Historical precedents: The decline in the once dominant technology companies

History offers warning stories about Tech giants, which stalls in the face of important platform shifts. Despite its dominance in the computer, Microsoft slowly adapted to the rise of the Internet and the mobile and lost its central position. Intel, once apparently unassailable, found its market challenged when Apple's customer -specific silicon unveiled its relative stagnation. Similarly, IBM's reign in Enterprise made computing wiped out when the cloud made its hardware -oriented strategy less critical.

These examples illustrate a recurring pattern: Dominant companies that could not effectively control basic changes in the calculation paradigm not only experienced a decline in the market share – they risk becoming less relevant in the developing technological landscape. Is Google positioned at a similar turning point today?

What to see is: the slow motion designs?

Several indicators signal whether this threat materializes:

• iOS 18 adoption rates and siri use data
• Changes to the TAC payments (Traffic Acquisition Cost) from Google to Apple
• Chrome use trends against AI-native platforms
• Advertisers spend shifts in the direction of AI-native advertising positions

Each of these metrics offers visibility as to whether Google's searchgrowing holds or crumbles.

Conclusion: Is this “iPhone moment” of this iPhone – but vice versa?

The current market reaction is not just about a disappointing quarter or a temporary headwind. It reflects the growing concern about whether the next computer paradigm – is about the conversations -KI – basically Google.

Google has built its empire to organize the information of the world through traditional search. If this model is out of date, the company could turn into a value trap from a reliable growth impaired in almost overnight. The drop in stock of 7.5% could only be the beginning of a significant re -evaluation, since investors struggle with this existential question.

What the iPhone made so revolutionary was not only the device itself, but as the technology landscape converted. Google is now facing a similar moment – but instead of being the disruptor, it becomes risk that it will be disturbed.

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