Alphabet shares fell about 14 percent after Search revenue growth decelerated and paid clicks slowed from 13 percent to 8 percent.
Alphabet said search queries are growing at their fastest rate in five years, yet Search revenue growth slowed to 12 percent year over year in the third quarter from roughly 17 percent in the prior quarter. Paid clicks growth decelerated from 13 percent to 8 percent over the same period.
Chief Business Officer Philipp Schindler attributed part of the slowdown to AI Mode, which he said monetizes at a lower rate than traditional searches even as query volume climbs strongly. Alphabet shares have dropped about 14 percent since the earnings report as investors weigh AI infrastructure spending near $200 billion this year.
Nate Elliott of eMarketer called the shift the first major disruption to Google’s core business in decades. For builders and operators, the data points to lower ad yield per query in AI surfaces, which changes assumptions baked into search acquisition budgets and channel mix planning.
Schindler described most AI Mode queries as incremental and often upper-funnel, and said ad experiments show promising results. The open question is whether the lower monetization reflects a deliberate, staged ad rollout or a deeper structural limit on advertising inside conversational search.
What matters
- Google’s paid clicks growth fell to 8 percent from 13 percent as AI Mode ads earned less.
- Operators planning AI-first search strategies should price in lower ad yield per query.
- Watch whether Google reports AI Mode ad revenue separately or folds it into Search totals.
Why it matters
Watch whether Google reports AI Mode ad revenue separately or folds it into Search totals.
This GenAI News article was prepared in original wording using reporting and materials published by The Verge. Source reference: https://www.theverge.com/ai-artificial-intelligence/1024862/google-search-ai-overviews-alphabet-earnings-q3.
Drafted by the GenAI News review pipeline.