Morgan Stanley: Google's search business is unlikely to be disrupted by Apple's AI use cases

According to the Smart Finance app, Morgan Stanley stated that Apple (AAPL.US)'s artificial intelligence products are unlikely to disrupt the "broad-based search market," which reinforces the bank's confidence in the temporary safety of Google (GOOGL.US)'s core business. Analyst Brian Nowak rated Google's stock as "hold" with a target price of $195. In a report, the analyst stated, "In our view, the use cases proposed by Apple do not seem to pose a decentralization threat to broad-based internet search (such as Google Search) or commercial query search." "Currently, we believe that the new Siri and Apple Intelligence are Apple's native assistants, with limited functionality. Collaboration with OpenAI will help Apple expand Siri's range of responses, provide answers to questions outside of Apple's iOS ecosystem, and API integration also represents the potential to extend functionality to third-party applications." The analyst pointed out, "As the product is expected to enter testing later this year, adoption may take time, and some features may not be available until 2025. In addition, Apple Intelligence is only available to users of iPhone 15 Pro and iPhone 15 Pro Max, as well as users of iPad and Mac M1 and newer versions." "In our view, this highlights the need for Google to develop/launch more of its own products. The moat around the highly practical 'broad search service' remains deep." Meanwhile, the analyst believes that Google is more likely to win the competition for artificial intelligence assistants, as the company has 6 apps with 2 billion or more users, 15 services with 500 million users, and multiple vertical-specific data sets such as shopping maps, YouTube, Google Maps, Gmail, etc. The analyst added, "We believe that the combination of leading technology and large and regularly updated data sets gives Google an advantage in building the next generation of artificial intelligence assistants." It is worth mentioning that Apple's collaboration with OpenAI has received widespread attention, and OpenAI's artificial intelligence chatbot ChatGPT is also set to be integrated into multiple Apple's next-generation operating systems such as iOS 18. However, Apple also stated that support for other artificial intelligence models will be introduced later. In response, the analyst stated that this indicates that Apple may also use Google's artificial intelligence large model Gemini. The analyst said, "In our view, the confirmation of the Apple/Gemini partnership may be beneficial to Google shareholders, as it will confirm Google's position in Apple's generative artificial intelligence tool stack."