Alphabet's financial report shows Google AI search revenue is lower than traditional search
After Alphabet announced its third-quarter financial results, its stock price fell nearly 10%. The company disclosed that revenue generated by AI search is lower than that of traditional search, even though overall search business revenue grew 12% year-over-year to $63.25 billion. Chief Business Officer Philipp Schindler said the slowdown in search business growth stems from the lower monetization capability of AI Mode. Company spending for the quarter reached $51.4 billion, about two-thirds of which went to servers and networking equipment, while net profit was $26.17 billion, down from $35 billion in the same period last year.
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The financial report discloses that AI search's monetization capability is lower than traditional search, offering a window into the revenue structure and investment pressure of the search giant amid its AI transformation.
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Google/Alphabet's stock price fell nearly 10% after the company announced its third-quarter financial results, because the search giant disclosed that revenue generated by AI search was lower than that of traditional search, even though its overall search business revenue grew 12% year-over-year to $63.25 billion. The search business growth rate was slightly lower than the 14.5% in the third quarter of last year. Alphabet Chief Business Officer Philipp Schindler said the reason for the slowdown in search business growth was that "we observed lower monetization capability in AI Mode." To promote its AI business, Google is simultaneously investing huge amounts of money in infrastructure. In the third quarter, the company's spending reached $51.4 billion, of which about two-thirds was used for servers and network equipment, and the remainder was used for data center construction. The huge spending affected profitability: Alphabet's net profit this quarter was $26.17 billion; in the third quarter of last year, when Google's revenue was $102.35 billion, net profit reached $35 billion. Schindler believes that AI search will eventually pay off.