Google’s Search Revenue Stumbles
Even during a good financial year, a big tech investor is seemingly never satisfied. For example, while Google Search grew 12% year over year and earned $63.3 billion last quarter, parent company Alphabet’s stock price suffered a spectacular drop. Despite the huge earnings, Search’s revenue fell short of Wall Street expectations, leading to a 13% decline in Alphabet shares and about $500 billion erased from its market value (via The Financial Times). The post‑earnings slide may be the worst in history, according to CNBC, and follows a broader $1 trillion sell‑off in AI‑related stocks earlier this month as anxious investors dumped shares.
Alphabet’s chief business officer, Philipp Schindler, explained the “disconnect” on the earnings call. He noted that strong query growth in AI Mode translated into lower monetization, but the company remains confident. Advertising experiments have shown promise, and Google is expanding ads in AI Overviews and AI Mode to more users, including international markets and multi‑shift ads in the U.S.
In addition to weak financial performance, Google is experiencing negative cash flow. Projections had limited the shortfall to about $3.5 billion, yet the company reported a $9.1 billion loss at the end of September—the second quarter of negative cash flow since its 2004 IPO. Heavy spending on AI—$51.3 billion in the last quarter alone—helps explain the deficit, and Google has committed over $1 trillion to data‑center and related purchases. Investors remain skeptical about the eventual return on that massive AI investment.