Alphabet shares fell about 10% in early trading as Google said AI search is eating into its ad business

Alphabet shares fell sharply after its third-quarter results on Wednesday, as Google said it is scaling ads inside its AI search experiences while growth in its core search advertising slows. TechCrunch reported shares down 8% following the results, and the Financial Times headline put the drop at 10%.

The numbers: Alphabet reported $127.6 billion in revenue, up 25% year over year. Google Search revenue grew 12%, down from 17% in the second quarter and 19% in the first. The Google Services division, which includes Search, brought in $96.3 billion, up 11%. Google Cloud revenue rose 103% to $30.7 billion. The FT headline also pointed to a $51bn AI outlay deepening cash burn.

The product news came from Philipp Schindler, Google's chief business officer, who said on the call: "This includes taking our monetization footprint global for the first time." Ads in AI Mode are expanding to 10 more countries: Australia, Canada, India, Kenya, Malaysia, New Zealand, Nigeria, Pakistan, the Philippines and Singapore, according to Unite.AI. Multiturn ads, which can appear in follow-up questions, launch in the US. Google plans more locales in the fourth quarter, including Brazil, Mexico and the United Kingdom.

Google says early results look good. Schindler said click-through rates for sponsored product listings in AI Mode are comparable to those for organic listings. CEO Sundar Pichai said Search queries grew at their fastest year-over-year rate in five years, that AI Mode queries are three times longer than traditional searches on average, and that one in five AI Mode searches globally involves voice, images or documents.

Why it matters for builders: ads are now part of how AI answers are monetized, and Unite.AI notes existing Search, Shopping and Performance Max campaigns are automatically eligible through the Google Ads auction, with no separate campaign needed. Anyone who depends on Search traffic or advertises through it should expect longer, conversational queries and sponsored placements inside AI answers.

What to watch: whether Search growth keeps decelerating as AI Mode ads scale, and how much spending on AI infrastructure investors will tolerate. Bloomberg and the FT covered the market reaction, but their full text was not available to us, so the figures above come from TechCrunch and Unite.AI.

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