Google's AI Search Pivot Backfires as Shares Plunge $500 Billion

Alphabet shares plunged over 11 percent on Wednesday, erasing more than $500 billion in market value after Google disclosed its AI search features generate less advertising revenue than traditional search. Google reported Q3 revenue of $127.6 billion, a 25 percent year-over-year increase, but capital expenditures more than doubled to $51.4 billion due to AI investments. Search revenue grew only 12 percent to $63.3 billion, down from 14.5 percent growth last year, which executives attributed to lower monetization in AI Mode despite higher query volumes. The decline follows Google's aggressive push of AI Overviews, which studies show have reduced click-through rates to publisher sites. News site visits fell from over 70 million monthly in July 2024 to about 47 million in July 2026, with media leaders predicting further traffic drops of nearly half over three years.