Alphabet shares fell 12.6% after Google disclosed lower monetization for AI Mode searches.
Why it matters: The decline tests whether Google can expand AI search without weakening the advertising economics that fund its business. It also focuses attention on Alphabet's $51.4 billion quarterly capital expenditures.
- Alphabet shares fell 12.6% intraday on October 29, 2026, according to TechCrunch.
- Google Search and other revenue rose 12% to $63.35 billion in the third quarter.
- Philipp Schindler said AI Mode generated less advertising revenue per query than traditional Search.
- Alphabet reported $51.4 billion in quarterly capital expenditures, while Google Cloud revenue grew 103% to $30.7 billion.
Alphabet shares fell 12.6% intraday on October 29, 2026, after investors reacted to evidence that Google's AI-powered search experiences were generating fewer advertising dollars per query than traditional Search, TechCrunch reported.
Alphabet reported third-quarter revenue of $127.6 billion, up 25% year over year, in its earnings release. Google Search and other revenue rose 12% to $63.35 billion. The company also said year-over-year Search query growth was its strongest in five years.
Google Chief Business Officer Philipp Schindler said the increase in AI Mode queries affected reported results because of “the lower monetization we were seeing in AI Mode,” according to an account of the earnings call. That means AI Mode was generating less advertising revenue per query than traditional Search. The company did not quantify a revenue shortfall for AI Overviews.
Alphabet said total Google advertising revenue rose to $82.01 billion from $74.18 billion a year earlier. Google Network revenue was broadly flat for the quarter and declined for the first nine months of 2026, according to the company's 10-Q filing.
Google is expanding advertising in both AI Overviews and AI Mode, including international availability and multi-turn advertising in the United States, according to the earnings materials. The expansion does not change Schindler's specific statement about lower monetization in AI Mode.
Alphabet reported $51.4 billion in quarterly capital expenditures, primarily for technical infrastructure. Google Cloud revenue grew 103% to $30.7 billion, according to the same earnings release.
By the numbers
- 12.6% - Alphabet's reported intraday share decline on October 29, 2026
- $63.35 billion - Google Search and other revenue in the third quarter
- $51.4 billion - Alphabet's quarterly capital expenditures
Yes, but: Alphabet's overall advertising revenue still increased year over year, and the company reported 25% growth in total quarterly revenue.