Following Apple (NASDAQ:)’s WWDC event, analysts at RBC Capital, Morgan Stanley, and Evercore ISI provided their thoughts on what the iPhone maker’s announcements could mean for Google (NASDAQ:)’s AI position.
RBC sees Apple’s AI product announcements as mixed or slightly negative for GOOGL. The bank did note one positive, with Apple saying it intends to add support for other AI models (besides ChatGPT) in the future and specifically mentioned Google’s Gemini as a likely example.
However, on the negative side, RBC highlighted the confirmation from Apple that OpenAI’s ChatGPT will be Apple’s first GenAI partner with ChatGPT integrated into Siri as well as a few of Apple’s other productivity apps around content creation.
“Bears will argue that Apple is diversifying away from GOOGL with tight integration of competing tools signaling fewer hand-offs to Google in the future,” they add.
Meanwhile, Morgan Stanley said the current iOS GenAI use cases don’t appear to be Google Search disintermediation threats.
“In our view, the use cases presented by AAPL do not appear to present a disintermediation threat to broad-based internet Search (i.e.GOOGL Search) or commercial query search,” said Morgan Stanley. “For now, we see the new Siri and Apple Intelligence products as a native AAPL assistant with still limited capabilities.”
Furthermore, the bank continues to believe AAPL is more likely than not going to leverage GOOGL and Gemini, given the aforementioned dynamics, noting that AAPL said it intends to add support for other AI models (other than OpenAI) in the future. “In our view, a confirmation of an AAPL/Gemini partnership is likely to be positive for GOOGL shareholders as it would confirm GOOGL’s position in AAPL’s stack of GenAI tools,” they added.
Oppenheimer surveyed consumers’ adoption and usage of Gen AI Search with a 1,000-respondent U.S. survey, leading up to Apple’s WWDC event.
They came away from the survey more constructive on Google’s competitive position in both Core Search and Gen AI Search, as it suggests “Google’s market share remains very strong even among Gen Zers.”
“Despite the rise of Social Media searches, we see very consistent leadership for Google Search across all demographics,” said Evercore. “Further, our survey suggests Gen AI is driving higher overall search volume, and Google’s AI products are leading to more effective searches and higher user satisfaction – which would likely translate into better ROAS for Advertisers and more Search Revenue for Google.”
