Google's AI search problem finally shows up in the earnings report, some investors believe
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Google's stock dropped by up to ten percent after its third-quarter search revenue growth of 12 percent fell short of the 15 percent analysts had predicted. Management acknowledged that the rapid expansion of AI-powered search queries is impacting monetization, as these interactions generate less revenue than traditional search methods. Despite this tension in its core business, Google reported strong performance in other areas, with cloud revenue more than doubling year-over-year to $30.7 billion due to a 103 percent increase. The company continues to invest heavily in future infrastructure, recording $51.4 billion in capital expenditures for the quarter alone and forecasting significantly higher spending in 2027. CEO Sundar Pichai highlighted that the Gemini app has reached one billion users, marking it as the fastest-growing product in the company's history. Additionally, Google’s APIs are processing nearly 32 billion tokens per minute, reflecting increased usage driven by reasoning models and agentic workflows. While investors worry about the lower monetization of AI search, Google plans to expand its ad program for chatbots both domestically and internationally.
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