Alphabet is attempting to confirm its rebound on Friday on the New York Stock Exchange after Wednesday's sharp correction, due to concerns about the future of its Google search engine.

Half an hour into trading, the US tech giant's share price was up 0.1%, after gaining 1.9% the previous day, although still not enough to make up for Wednesday's heavy fall (-7.2%).

According to analysts, this is its biggest daily drop since October 2023.

Apple's statements that its search engine would have to be enhanced with AI-related features or else it would soon become obsolete fueled fears surrounding Google.

'The news serves as a reminder that while the Magnificent Seven have benefited greatly from the optimism surrounding AI, their business models also face risks related to this disruption," Deutsche Bank analysts said.

More worryingly, according to experts, Apple's plans for AI-powered online search could jeopardize its multi-billion-dollar deal with Alphabet to make Google the default search engine on its devices.

Jefferies acknowledges that alternatives to Google are beginning to emerge, but also points out that Alphabet is not standing still in the field of AI, as evidenced by the 1.5 billion monthly active users of its AI tools and the recent innovations introduced by Gemini AI.

The broker also points out that the Google Chrome browser still has a 66% global market share.

Yesterday, UBS raised its target price for the stock from $173 to $186, praising the resilience of the tech giant's search engine business while anticipating an improvement in margins.

'Some consider Google to be the new Yellow Pages,' comments Christopher Dembik, investment strategy advisor at Pictet Asset Management.

'They're jumping the gun a little,' says the analyst.

'Based on the latest quarterly figures, search is still growing. There is no decline in this segment,' he emphasizes.

With a market capitalization of around $1.8 trillion, Alphabet is already 'priced' as if search were worth nothing, argues Christopher Dembik.

'In short, the company, with or without search-related revenues, is significantly undervalued," concludes the professional, who believes that a valuation closer to $2.5 trillion would be a more consistent target.


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