# Google's AI search costs it $500bn in value

> Alphabet's stock plunged after revealing its own AI summaries are cannibalizing search ad revenue, even as the company doubles down on artificial intelligence.
- Title: Google's AI search costs it $500bn in value · BBC News
- Summary: Alphabet's stock plunged after revealing its own AI summaries are cannibalizing search ad revenue, even as the company doubles down on artificial…
- Keywords: alphabet, google, artificial intelligence, search advertising, stock market, ai investment, philipp schindler, sundar pichai, news, world, Google's, search
- Source: BBC News — https://bbc.co.uk/news/articles/cm9qzdqpxy48o
- Published: 2026-10-29T21:29:51.58+00:00
- Read time: 1 min
- Topics: alphabet, google, artificial intelligence, search advertising, stock market, ai investment, philipp schindler, sundar pichai, news, world
## Google's AI mode hits ad revenue
Alphabet lost just over five hundred billion dollars in value on Thursday after revealing its AI summaries were eating into search advertising revenue. Chief business officer Philipp Schindler said the AI mode answers questions conversationally.

> AI mode, where it answers questions conversationally, was eating into the money it makes from ads
## Google chooses to eat its own lunch
Kim Scott, who formerly led Google's advertising business, said the company would rather eat its own lunch than allow someone else to eat their lunch by having its own AI summaries hit search revenue.

> rather eat its own lunch than allow someone else to eat their lunch
## Long-term bet on AI technology
Scott said Google was founded on making long-term bets on technology even if they hurt the firm in the short term. She believes Google is making a long-term bet on AI despite current revenue impacts.

> I think they're making a long-term bet on AI
## Revenue grew but missed expectations
Alphabet's total revenue grew twenty-five percent in the three months to the end of September, hitting one hundred twenty-seven point six billion dollars.
## Stock plummeted over twelve percent
Shares in Alphabet plummeted over twelve percent to a six-month low following the results release.
## Amazon and Microsoft also spending heavily
Microsoft and Amazon also issued updates this week and joined Google in plans to keep spending huge sums on AI.
## Amazon's cash flow turns sharply negative
Amazon's stock fell six percent in after-hours trading. The company reported quarterly sales growth of eleven percent hitting two hundred one billion dollars, but a staggering negative cash flow of forty-two billion dollars.
## Microsoft cuts AI spending, investors unmoved
Microsoft spent around five billion dollars less on AI investments and cut thousands of workers.
## Key takeaway

Alphabet lost five hundred billion dollars in market value after disclosing that its AI search mode is reducing advertising revenue, though executives say the long-term bet on AI justifies the short-term pain.