Alphabet: Losing Default Status on Samsung Devices May Not Be Significant

We are maintaining our $154 fair value estimate on Alphabet. According to The New York Times, Samsung is considering changing the default search engine on its devices from Google to Microsoft’s Bing for the first time in 12 years. While Google is facing increasing competition and disruption in the online search market, mainly because of the emergence of artificial intelligence, we think it can maintain its network effect moat source. First, we have not seen indications of search market share loss since the release of OpenAI’s ChatGPT (November 2022) and Microsoft’s AI chat feature in Bing (February 2023). According to Statcounter, Google’s market share has not been affected through April. Plus, even before becoming the default search engine on Samsung devices 12 years ago, Google’s share was around 90% and has remained between 90% and 95%.