Google: AI Answers in Search Are Bringing In Less Money

Alphabet shares fell 10% after the third-quarter earnings report. Google, both a search engine and an AI company, posted search revenue growth of about 12% year over year. That missed analyst forecasts of 15%. At the same time, the growth rate of search query volume actually picked up, hitting a five-year high. But on the investor call, Google mentioned that its AI Mode, AI-generated answers shown directly in search results, is growing fast. It is still less profitable than regular search results pages. The company also said it is starting to place ads inside AI Mode answers in new countries.

The more queries get answered right inside the search engine, with no click-through to a website, the less traffic businesses get that depend on organic search. This holds true even as overall search volume keeps growing.