{"id":645075,"date":"2026-10-29T18:24:08","date_gmt":"2026-10-29T18:24:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/645075\/"},"modified":"2026-10-29T18:24:08","modified_gmt":"2026-10-29T18:24:08","slug":"google-admits-ai-search-makes-less-money-but-its-fixing-that-with-more-ads","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/645075\/","title":{"rendered":"Google admits AI search makes less money, but it’s fixing that with more ads"},"content":{"rendered":"

Google parent Alphabet reported its Q3 financial results<\/a> on Wednesday afternoon, showing a healthy rise in revenue for the months of July to September. But the company\u2019s stock price has taken a beating, marking one of the largest post-earnings drops in its history. It comes down to several troubling aspects of the new report, including an admission by the company that AI search isn\u2019t earning as much as organic search, and despite that, Google expects to spend even more on AI next year.<\/p>\n

The company took in almost $128 billion in Q3 2026, earning more than $26 billion in net income. These may sound like good numbers, but financial markets are not impressed. While revenue is up 25 percent versus last year, net income is almost $9 billion lower. As of this story\u2019s publication, the stock price is down almost 12 percent, and it was down about 13 percent earlier in the day.<\/p>\n

While revenue was up 25 percent year over year, analysts expected more. Google reported earnings per share of $2.12, but the consensus projection ahead of Wednesday was $3.02. Google\u2019s Cloud products actually beat expectations, crossing $30 billion in revenue. That\u2019s about a billion more than analyst guesses.<\/p>\n

Google is still making a huge amount of money, but there are several troubling trends emerging. The last few years at the company have been all about AI, with generative technology appearing in products from Gmail to Android. Most notably, Google is shifting to an AI search platform<\/a> powered by Gemini models.<\/p>\n

During the earnings call, Chief Business Officer Philipp Schindler discussed<\/a> the company\u2019s search volume. This is one of the key metrics by which Google tracks its own performance. In the last quarter, Google saw search grow by 12 percent versus last year. Good for the company, right? Except that\u2019s a much slower rate than previous quarters. Growth in Q2 was 17 percent, and Q1 saw 19 percent growth over 2025. Search revenue was also flat in Q3.<\/p>\n

So that\u2019s the first problem, likely driven by more consumers using AI chatbots to find answers. The other issue is that Google\u2019s take on AI search isn\u2019t pulling in revenue like standard web search yet. According to Schindler, each AI Mode query earns less revenue compared to a similar web search\u2014there are fewer ads, and they cost less to run.<\/p>\n","protected":false},"excerpt":{"rendered":"Google parent Alphabet reported its Q3 financial results on Wednesday afternoon, showing a healthy rise in revenue for…\n","protected":false},"author":2,"featured_media":645076,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[365,363,364,111,139,69,145],"class_list":["post-645075","post","type-post","status-publish","format-standard","has-post-thumbnail","category-artificial-intelligence","tag-ai","tag-artificial-intelligence","tag-artificialintelligence","tag-new-zealand","tag-newzealand","tag-nz","tag-technology"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/645075","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=645075"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/645075\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/645076"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=645075"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=645075"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=645075"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}