Alphabet Loses $500bn as AI Search Undercuts Ads — SkimNews
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- Alphabet reported quarterly revenue of $127.6bn for the three months to September, up 25% year on year, but its advertising performance missed analyst forecasts and shares fell more than 12% to a six-month low.
- Alphabet shed just over $500bn (£374bn) in market value on Thursday, ending at $3.46tn after closing the prior day at $3.97tn.
- AI mode answers search questions conversationally, and chief business officer Philipp Schindler said the format is eating into ads displayed alongside results for traditional queries.
- Kim Scott, who formerly led Google's advertising business, said the company is making a long-term AI bet even if its own AI summaries reduce search revenue in the short term.
- Tracy Woo, a principal analyst at Forrester, said Alphabet's disappointing Search results exposed the challenge of funding massive AI investments while maintaining the strength of established businesses.
Why it matters: Alphabet’s shareholders bore the immediate cost: more than $500bn in market value and a 12% share plunge after advertising undershot forecasts. The material change is inside Google itself—AI search is already cannibalizing the ad model behind traditional results, even as total revenue grew 25%.
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