Google admits AI search makes less money, but it's fixing that with more ads
Google parent Alphabet reported its Q3 financial results on Wednesday afternoon, showing a healthy rise in revenue for the months of July to September. But the company's 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't earning as much as organic search, and despite that, Google expects to spend even more on AI next year. The compa
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Google's AI search feature generates less revenue per query than traditional web search because it contains fewer ads that cost less to run. The company is responding by expanding ads throughout its AI search product, including new multi-turn ads that change as users interact with the search chatbot. This matters because Google's search growth is slowing, falling from 19 percent year-over-year growth in the first quarter to 12 percent in the third quarter, which analysts attribute partly to people using AI chatbots instead of traditional search. Google is betting heavily on AI despite negative cash flow of negative $9.06 billion in the most recent quarter, with plans to spend over $300 billion on AI investment next year.
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