A six-month low for the search giant
Google's parent company lost roughly $500bn in market value after it disclosed that its own AI search summaries were hurting advertising revenue. The stock fell to a six-month low, wiping out gains built up over the past year and unsettling investors who had treated search advertising as a dependable cash engine.
The company's AI overviews answer many queries directly at the top of the results page. That is convenient for users, but it gives them fewer reasons to click through to the pages where ads are sold. Advertisers pay for attention, and the summaries are taking a share of it.
The wider tech sell-off
The disclosure landed in the middle of a rough stretch for technology shares. United States tech stocks fell sharply as spending on artificial intelligence infrastructure across the industry approached $1tn. Intel shares kept falling, and the tech-heavy Nasdaq opened at its lowest level in more than two months.
Investors have spent two years rewarding companies that promised to build data centres, buy chips and train larger models. The question now is when that spending produces earnings. When a company as large as Google says its AI products are pulling money away from its oldest business, the arithmetic gets harder to defend.
What analysts are watching
The pressure is not limited to Google. Several hyperscale buyers have signalled another year of heavy capital spending, financed partly by debt. That leaves little room for a revenue disappointment, because the costs are already committed.
Attention now turns to the next round of quarterly results, where management teams will be asked how AI features change click rates, ad prices and subscription conversion. Some analysts argue the shift is a pricing problem rather than a demand problem: fewer clicks can be offset by higher prices per click if the traffic that remains converts better.
Others are less patient. They point out that search has funded Google's other bets for two decades, and that a decline in that business would force the company to justify its spending on cloud, chips and models on their own terms. For now, the market has delivered its verdict on the first set of numbers: about half a trillion dollars of value removed in a single session.