Google AI Search Growth Misses Wall Street Targets

Alphabet shares fell as much as ten percent on Wednesday after the company reported third-quarter search revenue growth of 12 percent, below the 15 percent Wall Street analysts had penciled in. The miss landed on a business that has carried Google's earnings for two decades and reignited a worry that's followed the company since it first rolled out AI Overviews: that answers generated by AI simply don't make as much money as the blue links they're replacing.

Cloud gave investors something else to look at, with revenue more than doubling to $30.7 billion, up 103 percent year over year. Capital spending hit $51.4 billion for the quarter alone, and executives told investors to expect that number to climb again in 2027 as the AI buildout continues.

So the picture coming out of this earnings report is split. Search queries are growing at their fastest clip in five years, cloud is booming, and spending is accelerating across the board. But the question of whether AI-driven search can pay for itself the way the old version did is no longer hypothetical. Google's own executives addressed it directly on the call.