Google shares fall as AI search mode brings in less revenue than expected

Cloud grew, search slowed

Alphabet's quarterly results showed two different pictures. Cloud revenue reached $30.7 billion, more than doubling, while search ads — the company's core revenue engine — grew only 12% and came in below expectations.

The result sent Google shares down as much as 10%. Investors are worried about whether the AI-powered search experience will erode the company's oldest revenue line.

AI mode earns less

Google acknowledged that its fast-growing AI mode feature brings in less revenue than traditional search. The company is now expanding the ad program inside AI mode to international markets.

In short, AI mode gives users AI-generated answers instead of a classic list of links, which changes where ads appear and how users click.

Why it matters

Most of Google's revenue still comes from search. As AI answers spread, users get responses without visiting sites, which pressures ad revenue for both Google and content publishers. Expanding AI mode ads reads as an effort to make that transition monetizable.