Google admits AI search makes less money, but it's fixing that with more ads

What happened: Alphabet reported Q3 results with revenue up 25 percent, but the stock fell sharply after the company admitted AI search earns less than organic search and said it will spend more on AI next year. Key numbers: Revenue almost $128 billion in Q3 2026. Net income over $26 billion, about $9 billion lower than last year. EPS $2.12 versus $3.02 expected. Stock down almost 12 percent. Why it matters: Markets were not impressed despite revenue growth, and analysts expected more. Google plans to address the lower AI search earnings with more ads while increasing AI spending next year.

Alphabet reported Q3 results with revenue up 25 percent, but the stock fell sharply after the company admitted AI search earns less than organic search and said it will spend more on AI next year.

Markets were not impressed despite revenue growth, and analysts expected more. Google plans to address the lower AI search earnings with more ads while increasing AI spending next year.