Google's AI search threatens its own ad revenue model

Alphabet, Google's parent company, saw its stock plunge 12.6% on Thursday, losing $500 billion in market value, its second-largest one-day loss ever, after revealing its AI-powered search tool is undermining its core advertising business. The new AI Mode lets users get direct answers instead of clicking through links, reducing time spent on Google's site and cutting ad display opportunities. While Q3 revenue still grew 12% to $63 billion, growth slowed from earlier quarters and missed analyst expectations, fueling investor concerns about AI's profitability. Google's AI Overview has similarly hurt external websites by reducing click-throughs, though its cloud business grew 103%. Alphabet plans its first stock issuance since 2005 to raise $85 billion, as major tech firms prepare to invest over $700 billion in AI infrastructure in 2026.