Plunge -7.5%... Google's "Yahoo Moment"?

1/ Last night, Apple's Eddy Cue mentioned several things (such as adding AI to Safari, etc.), but the most important incremental information was that "for the first time in 20 years, 'traditional search volume' has declined on Apple devices." There are often many third-party channels that compare AI search vs. traditional search, but as long as it's a third-party channel, there are inherent discrepancies in the metrics. This time, it was Apple's own data, so the market was greatly shocked by this "narrative turning point."

2/ The market consensus (including our discussions yesterday on WeChat public account + several buy-side and sell-side opinions) has taken into account the context of Apple's remarks. This was Apple's statement during the Google antitrust inquiry, so Apple has a complete motive to "weaken Google's image" + "elevate the image of Google's competitors."

3/ The narrative that "AI search" is squeezing "traditional search" has never been new; it has been discussed since the advent of GPT. This time, it is just getting closer to being "solid evidence" from the data. Some bullish views suggest that the cake taken away from Google by AI has never been the part that Google could monetize (for example, you might ask DeepSeek today, "Google has dropped so much, what exactly happened?" This subjective question has never been monetized by Google). What Google usually monetizes are often more objective questions, such as "Which hotel should I go to?" However, I maintain the view that the bulls' idea might be a bit naive (once users' mindsets and habits are formed, why can't AI search introduce an index function similar to traditional search?).

4/ Another bullish argument is that Google's advertising revenue is still very high and not affected by AI. Here, I quote Guo Mingqi's statement that AI has not yet launched advertising services, so advertisers have no choice, and thus Google's monetization/financial statements are temporarily unaffected. He also referenced the critical "Yahoo moment"; this perspective makes sense.

5/ If it is a critical "Yahoo moment," a reference point would be Meta's PE at the end of 2022, which was about 9x PE (compared to Google's current PE still at 15x). At that time in 2022, Meta was questioned about being replaced by TikTok, along with huge capital expenditures in the metaverse. The bears are now thinking in reverse, considering how much Google's other businesses are worth, and after going through a sum-of-the-parts (SOTP) valuation, they are looking at how low they can squeeze the valuation of search. If Google only has YouTube + Cloud + others left, how low can it be squeezed?

6/ Open AI's search products are still relatively average, but what if this effect continues to improve?

7/ Google search ads, are Meta's ads more valuable in competition with Google? Moreover, the time you spend searching for things has decreased, while the time spent on entertainment-related Meta businesses has increased.

8/ If Google search declines, should we rethink the series of SEO/SEM businesses established alongside Google search, such as travel platforms (Booking / Ctrip)? Because the logic of driving traffic through search is no longer feasible. The next phase is the AI search era similar to the dark library (refer to our WeChat article + Deepseek? AI Agent's first step... (February 16)); in the future, we should focus on "SEO/SEM" around AI search, guiding AI to fetch monetizable information for users.

9/ There are similar long and short discussions about Apple,

10/ Many people's first reaction is to apply this logic to Baidu for a short position... The logic is correct, but Baidu is so weak that I actually can't bring myself to do it; it feels like the space won't be very large.

At the end of the session, there were also some news about the diffusion of AI chips, and we will continue to follow up on this discussion today.

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