Google Shares Drop as Search Revenue Grows Slower Than Expected
Despite a strongly growing cloud division, Google's search business fell short of expectations. The company acknowledges that its AI search generates less revenue than classic search.
Google's shares fell by as much as ten percent at times after the company published its quarterly results. The main trigger was the performance of search, which grew revenue by 12 percent, more slowly than expected. Many investors apparently had higher expectations, even though the company as a whole is doing well.
The cloud business, by contrast, was strong. Revenue in this division more than doubled and reached 30.7 billion US dollars. The cloud thus remains one of the company's most important growth drivers, partially offsetting the weakness in its core business.
Investors are paying especially close attention to the AI Mode in search. Google has acknowledged that this fast-growing mode generates less revenue than traditional search. For a company whose business model has long relied on advertising revenue from search, this is a sensitive point, because AI-generated answers may offer fewer ad spaces.
In response, Google is now expanding its advertising program for AI Mode internationally. Whether revenues in this area will approach the level of classic search over the medium term remains to be seen. The quarterly figures nonetheless show that the shift to AI-powered search offers Google both opportunities and economic risks.
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