ECONOMY & MARKETS
Alphabet's 13% Slide Exposes Gap Between AI Search Demand and Ad Revenue
Third-quarter revenue and net profit per share fell short of expectations as AI Mode queries grew faster than Google could monetise them, wiping roughly $500bn off Alphabet's market value.
Alphabet shares fell 13.03% on Wall Street after third-quarter results missed market expectations, a session la Repubblica describes as stripping roughly $500bn from the company's market capitalisation — the heaviest one-day fall in its history. The trigger sits squarely within the economics of AI products: Google's AI Overview answers and its chatbot-style AI Mode are expanding search usage faster than the company is converting that usage into advertising income. That gap between AI-driven engagement and AI-driven revenue is the substance of the sell-off, not a side detail.
The reported figures were short on both lines. Revenue rose 25% to $127.58bn against the $128.22bn the market had forecast, while net profit came in at $2.12 a share against $2.99 expected, according to ANSA. Within that, Google Search revenue rose from $56.57bn in the third quarter of 2025 to $63.35bn a year later — an increase of almost $6.8bn — but the pace of growth decelerated through the year, from 19% in the first quarter to 17% in the second and 12% in the third. Analysts had expected about $65bn in Search revenue; the $63.35bn delivered represents a shortfall of roughly 2.5%.
The mechanism is visible in management's own account. Sundar Pichai, Alphabet's chief executive, said the annual growth rate in the number of Google searches reached its highest level in five years, and that queries in AI Mode run about three times longer than traditional ones. Philipp Schindler, Google's commercial chief, acknowledged on the quarterly conference call with analysts and investors that strong growth in AI Mode queries had contributed to the slowdown in Search revenue. The shortfall is sharpest in Search, though la Repubblica lists four distinct sources of investor concern: advertising results below expectations, the deceleration in Search, slow monetisation of AI Mode and heavy cash absorption by investment.
The next factual marker is Alphabet's following quarterly disclosure, when the company reports Search revenue and any further detail on how AI Mode is being monetised.