Google's Transition to AI Search Model Leads to Massive Drop in Shares
Google's announcement that its AI search features generate less revenue than traditional ads caused its shares to fall by more than 11%.
Alphabet, Google's parent company, lost more than 11% of its value on Wednesday and wiped out over $500 billion from its market value after announcing that AI search features generate less revenue compared to the traditional search advertising model.
According to Google's reported third-quarter results, the company achieved quarterly revenue of $127.8 billion, a 25% increase year-over-year; however, capital expenditures more than doubled to reach $51.4 billion due to AI investments.
Google Chief Business Officer (CBO) Philipp Schindler acknowledged that the slower growth in search revenue was due to lower monetization rates in the AI Mode.
Meanwhile, research shows that Google's AI Overviews features have significantly reduced traffic and click-through rates for news publishers.
Sources
- futurism.com · Link