.oesnadaWhere have you been?

Storyline

Google AI Mode Ads Expansion and Monetization Struggles

Google AI Mode Ads Expansion and Monetization Struggles: 2 developments on 2 different days since 29 October 2026. Latest development, 31 October 2026: Alphabet shares fell 12% on Thursday, the company's worst day on record, wiping out about $500 billion in market value, and slid again on Friday.

Oesnada automated editorial system · Last updated: (2026-10-31)

The story so far

Alphabet reported third-quarter revenue growth of 25% on 28 October, with Google Cloud revenue up 103% 1. YouTube advertising brought in $11.2 billion, a 9% increase from a year earlier 2. On 29 October, Google announced on the earnings call that ads in AI Mode, its conversational search option, were expanding into international markets 3. The company also reported negative free cash flow of $9.07 billion for the quarter, far worse than the $2.70 billion analysts had expected 4. Google acknowledged that searches in AI Mode currently earn less than traditional searches, and the weaker returns came as Alphabet spends heavily on AI infrastructure 5. Alphabet's market value fell by about $500 billion after its shares dropped more than 11%, putting the company on track for the worst single-day reaction in its 22-year history 6.

By 31 October, Alphabet shares had fallen 12% in what was described as the company's worst day on record, and they slid again the following day 7. Investor attention had moved from growth to cash burn, debt, and whether the returns would justify the spending 7.

Written automatically from the Oesnada stories in this timeline. Every number is checked against them. The numbers in brackets link to those stories.

Timeline

  1. TechCrunch

    Cracks Emerge in the AI Spending Boom

    Alphabet shares fell 12% on Thursday, the company's worst day on record, wiping out about $500 billion in market value, and slid again on Friday.

  2. Also on our radar Alphabet stock falls 12%+ on negative cash flow, wiping out record $500B Financial Times

    Alphabet's market value fell by about $500 billion on Thursday after its shares dropped more than 11%, putting the Google parent on track for the worst single-day reaction in its 22-year history. A close down more than 9.77% would set that record and rank as the second-largest one-day loss for any stock. The sell-off followed third-quarter results in which Alphabet missed Wall Street estimates for both earnings per share and revenue, its first such double miss since the end of 2022. The company also reported negative free cash flow (cash left after operating costs and investments) of $9.07 billion, far worse than the near break-even analysts had expected. The results matter because Google Search is a high-margin business that typically helps fund Alphabet's heavy spending on AI. Search revenue grew 12% year over year, slowing from 17% in the second quarter and 19% in the first, and it missed forecasts for a second straight quarter. Alphabet's services unit, which includes Search, brought in $96.3 billion against expectations of $98.5 billion. Gil Luria of D.A. Davidson told CNBC, "This may be the quarter we feared," pointing to concerns that AI chatbots and agents will take business from traditional search engines. Alphabet's cloud business was a bright spot, with $30.7 billion in revenue, ahead of analyst estimates. Chief Financial Officer Anat Ashkenazi said capital expenditures, the money spent on assets such as computing infrastructure, will rise significantly next year, largely because of the AI race. Alphabet also reported a $7.66 billion operating loss in "Alphabet-level activities," which it tied largely to AI development. The Nasdaq fell 1.1% on the news, and "neocloud" stocks, meaning companies that rent out AI computing capacity, also came under pressure. Microsoft reported $45.2 billion in capital spending, up 30% from a year earlier but below the $50.67 billion analysts expected, and cut its full-year spending forecast to $170 billion. Its shares still fell 1.4%, as traders read the slowdown as a sign the company does not expect big near-term returns from AI.

    Read at the source
  3. The Register

    Google Struggles to Make AI Mode Search Results Profitable

    Alphabet's shares fell nearly 10 percent in after-hours trading, to about $292.50, and more than 10 percent in premarket trading the next day, after Google acknowledged that searches in its AI Mode currently earn less than traditional searches.

  4. Also on our radar Alphabet Q3 negative free cash flow $9.07B; keeps $195B-$205B capex forecast Cnbc

    Alphabet shares fell more than 10% after the Google parent reported negative free cash flow of $9.07 billion for the third quarter, far worse than the $2.70 billion analysts expected. Free cash flow is the cash left after a company pays for operations and investments. Capital expenditures totaled $51.36 billion, below the $55.09 billion analysts had projected. The company kept its full-year capex forecast at $195 billion to $205 billion, the range it set in the second quarter when it raised the figure from $190 billion. The results landed as investors press the large cloud providers, often called hyperscalers, to show a substantial return on their AI infrastructure spending. Finance chief Anat Ashkenazi told analysts that Alphabet expects capex to increase significantly in 2027, with more detail promised on the fourth-quarter call. Equity holdings also hurt results: after a $99.03 billion gain in the second quarter tied to stakes in SpaceX and Anthropic, that category produced an $8.66 billion loss in the third. Jefferies analyst Brent Thill said cloud was the only business that beat expectations. Google Cloud, home to the company's AI offerings, did deliver. Revenue more than doubled to $30.7 billion, ahead of the $28.7 billion analysts expected, and the company continues to gain share from Amazon Web Services and Microsoft Azure. Cloud CEO Thomas Kurian, speaking on his first earnings call in the role, cited extraordinary demand from AI labs, capital markets, financial services firms and enterprises. Google said its Gemini app reached 1 billion users, its fastest-growing product ever. CEO Sundar Pichai said the Argon Gemini model is drawing strong demand and that the newer Carbon version outperforms it in almost every domain. He added that AI investment helped drive the fastest query growth in five years.

    Read at the source
  5. Also on our radar Google Expands AI Search Ads Globally as Core Ad Growth Slows Techcrunch

    Google is taking advertising inside its AI-powered search experience global for the first time. Philipp Schindler, Google's chief business officer, announced on Alphabet's third-quarter earnings call that ads in AI Mode, the conversational search option, are expanding into international markets. Multi-turn ads, which can appear across a back-and-forth exchange, and AI Mode ads are also coming to the U.S. Alphabet reported $127.6 billion in quarterly revenue, up 25% from a year earlier. The expansion comes as growth in Google's core business has cooled. Search revenue rose 12% year over year in the third quarter, down from 17% in the second quarter and 19% in the first. Google says early results show the new ad formats are working, and its user research indicates people find the ads relevant. Alphabet's Google Services division, which includes Search, generated $96.3 billion in revenue, up 11%. CEO Sundar Pichai said Search queries grew at their fastest year-over-year pace in five years, though he did not give the figure. He credited AI features for changing how people search: queries in AI Mode are on average three times longer than traditional searches, and one in five AI Mode searches globally involves voice, images, or documents. Google has also passed 50 billion visual searches a month. The quarter included the release of Gemini 4 Argon, the Gemini app reaching 1 billion monthly users, and the launch of the Pixel 11 lineup.

    Read at the source
  6. Also on our radar Alphabet Q3 YouTube ad revenue up 9% YoY to $11.2B, below estimates Variety

    Alphabet reported third-quarter revenue of $128 billion on Thursday, up 25% from a year earlier and in line with what analysts surveyed by Yahoo Finance expected. YouTube advertising brought in $11.2 billion, a 9% increase year over year. Earnings per share were $2.12, down from $2.87 in the same quarter a year ago. The results arrive while Wall Street is becoming more cautious about the huge sums big technology companies are putting into artificial intelligence. Falling per-share earnings alongside strong revenue growth may sharpen that focus, though the report itself does not tie the two together. Alphabet's spending plans are part of that backdrop. In July, the company raised its forecast for capital expenditure, meaning money spent on long-term assets and infrastructure, to between $195 billion and $205 billion for the year, up from roughly $190 billion. The increase was meant to cover greater spending on AI.

    Read at the source
  7. Also on our radar Alphabet Q3 revenue rises 25% to $127.6B as Google Cloud jumps 103% to $30.7B Alphabet

    Alphabet reported third-quarter 2026 revenue growth of 25% from a year earlier, with the title putting revenue at $127.6 billion and Google Cloud revenue up 103% to $30.7 billion. Operating income rose 30% and the operating margin was 31.8%. Net income available to common stockholders was $26.2 billion, or $2.12 per share. CEO Sundar Pichai said the company is now on a half-trillion-dollar annual revenue run rate. Pichai attributed the Cloud surge to heavy demand for Google's AI infrastructure (the computing systems used to train and run AI models) and its AI software and services. Sales of TPU systems, Google's custom AI chips, were also a meaningful contributor to revenue growth, and Pichai said customers across a wide range of industries want them. Google Cloud's product revenue comes mainly from selling those TPU systems. He added that AI investments are lifting Search query growth, including commercial queries, at the fastest year-over-year rate in five years. Pichai said Google's first-party model APIs, which let developers use its AI models directly, now process nearly 32 billion tokens per minute, more than four times the level a year ago. He also said the Gemini 4 models Argon and Carbon are leading at the frontier. On the financing side, Alphabet issued senior unsecured notes for net proceeds of $28.7 billion for general corporate purposes. Under its at-the-market program, it also sold shares of Class A and Class C stock for net proceeds of $4.3 billion and $8.1 billion. The board declared a quarterly dividend of $0.22 per share on common stock, payable December 14.

    Read at the source

Topics in this story

Methodology and sources

Oesnada groups published stories into a storyline when a language model judges that they continue the same thread. The grouping is automatic and can be wrong. A thread gets a page once it has at least 1 full Oesnada story, at least 3 developments in all, on at least 2 different days and from at least 2 different outlets. Shorter items listed as "Also on our radar" count as developments, but at most 2 of the 3 can be one of them. The one-line updates and the summary are written automatically from Oesnada stories only, and every number in them is checked against those stories.

Cite this page

Oesnada, "Google AI Mode Ads Expansion and Monetization Struggles", https://oesnada.com/storylines/google-ai-mode-ads-expansion-and-monetization-struggles, accessed 2 November 2026.