Apple Is Threatening to Challenge Alphabet's Empire: Is the Stock a Buy?

Group 1 - Apple has faced challenges this year, including higher costs due to tariff policies, particularly affecting its manufacturing in China [1] - Despite these challenges, there are growth opportunities, particularly in integrating AI into its Safari search capabilities, which could position Apple in direct competition with Alphabet [2][4] - If successful, this integration could generate significant advertising revenue for Apple, leveraging its installed base of over 2.35 billion devices [5] Group 2 - The search market is dominated by Google, which holds a 90% share, making it difficult for Apple to succeed in this area, similar to Microsoft's previous attempts [6] - However, Apple's large ecosystem and monetization initiatives, including its services segment with over a billion paid subscriptions, provide a strong foundation for potential growth [7] - In Q2 of fiscal year 2025, Apple's services unit generated $26.6 billion in sales, an 11.6$95.4 billion, indicating that service sales are outpacing device sales [8] - The services segment has a gross margin of 75.7%, significantly higher than the 35.9% margin for devices, highlighting its importance to Apple's profitability [9] - The growth of the services segment is a key reason for long-term investment attractiveness, even if Apple does not surpass Alphabet in search [10]