Google shares plunge 13% as AI features dent search revenue

Alphabet’s shares plunged 13%, erasing $500 billion in market value, after Google Search revenue of $63.3 billion missed Wall Street expectations despite 12% year-over-year growth. The shortfall stems from Google’s AI Mode features, which generate lower ad revenue per query, though executives say ad scaling in AI Overviews and AI Mode is underway. The decline may mark the worst post-earnings drop ever, following a broader $1 trillion tech selloff earlier this month. Google also reported negative cash flow of $9.1 billion, its second such quarter since 2004, after spending $51.3 billion on AI. The company plans over $1 trillion in data center investments despite investor concerns about AI returns.