Alphabet loses more than $500 billion in market value in a day as AI search squeezes ad revenue
Photo: Collected
A new generation of AI chatbots, including ChatGPT and Claude, is now becoming an alternative to conventional search engines. Google does not want to fall behind in this artificial intelligence (AI) race, and the company is moving quickly towards AI-driven search to hold on to its market dominance and its very existence. But this survival strategy is putting pressure on what has long been Google’s most profitable business: search advertising revenue.
British broadcaster the BBC reported that Google’s parent company Alphabet lost more than $500 billion in market value in a single day on Thursday, after disclosing that search summaries generated by its own AI technology had reduced advertising revenue.
According to the company’s chief business officer, Philipp Schindler, Google’s ‘AI Mode’, which answers users’ questions in a conversational style, is having a negative impact on revenue from ads shown alongside conventional search. Still, he is optimistic about the future progress of the AI-centred search engine. ‘I’m very pleased with the trajectory of our progress,’ Schindler said.
With the rapid rise of AI, Google’s long-standing dominance in answering the world’s questions is now being challenged. Millions of people are using AI-based programs such as ChatGPT or Claude instead of Google. Kim Scott, a former head of Google’s advertising business, told the BBC’s ‘Today’ programme that even though its own AI summaries are cutting search revenue, Google is more willing to accept that loss itself than to let anyone else take over its business.
In her words, ‘Google is prepared to hurt its own business rather than let someone else take a share of it.’ Kim Scott said Google was founded on long-term technological investment. Although such investments hurt the company in the short term, Google makes these decisions with the prospect of long-term gains in mind.
‘I think they have decided to make a long-term investment in AI,’ said Kim Scott.
In its financial report published on Wednesday, Alphabet said its total revenue for the three months ending in September this year rose 25 per cent year on year to $127.6 billion.
However, the company fell short of analysts’ expectations. In particular, lower-than-expected revenue in the advertising business worried investors. After the financial report was published, the share price fell more than 12 per cent to its lowest in six months. At the close of trading on Thursday, Alphabet’s total market value had fallen from $3.97 trillion the previous day to $3.46 trillion.
Tracy Wu, principal analyst at research firm Forrester, said the weaker-than-expected results in the search business made clear that funding huge investment in AI while maintaining the strong position of its established businesses is a major challenge for Alphabet.
By the numbers
According to a 28 October report by technology news outlet 9to5Google, Alphabet’s revenue in the third quarter of 2025 was $102.3 billion. In its results announcement filed with the US Securities and Exchange Commission (SEC) the same day, Alphabet said Google Cloud revenue rose 103 per cent to $30.7 billion in the quarter.
A Reuters report of 28 October said analysts had expected revenue of $128.2 billion, according to LSEG data; after the results were published, the share price fell nearly 8 per cent in extended trading.
Sources
Original report: Ajker Patrika
Background sources: 9to5Google, 28 October 2026; Alphabet (SEC filing), 28 October 2026; Reuters (Global Banking and Finance Review), 28 October 2026
