Report · arstechnica.com
Google admits AI search makes less money, but it's fixing that with more ads

arstechnica.com
Source published October 29, 2026
Summary: 1 min read
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Summary
Alphabet reported nearly $128 billion in third-quarter 2026 revenue and more than $26 billion in net income for July through September. Revenue rose 25 percent from a year earlier, but net income fell by almost $9 billion. Alphabet’s shares dropped nearly 12 percent after the results, after falling about 13 percent earlier in the day. Earnings per share reached $2.12, below the $3.02 consensus forecast, while Google Cloud revenue exceeded $30 billion, roughly $1 billion above analysts’ estimates. Google is expanding AI-powered search built on Gemini models, but Chief Business Officer Philipp Schindler said AI Mode queries generate less revenue than comparable conventional web searches. AI Mode carries fewer ads, and those ads cost less to run, according to Schindler. Google’s search volume grew 12 percent year over year in the third quarter, down from 17 percent growth in the second quarter and 19 percent in the first quarter. Search revenue was flat in the quarter. Alphabet also expects to increase AI spending next year despite AI search’s lower current monetization.
Key Takeaways
- Alphabet generated nearly $128 billion in Q3 2026 revenue and more than $26 billion in net income, but earnings per share of $2.12 missed the $3.02 consensus forecast.
- Alphabet shares fell nearly 12 percent after the earnings report, while net income was almost $9 billion lower than a year earlier despite 25 percent revenue growth.
- Google Chief Business Officer Philipp Schindler said AI Mode search queries earn less revenue than similar standard web searches because they show fewer ads and the ads cost less.
- Google search volume grew 12 percent year over year in Q3, compared with 17 percent in Q2 and 19 percent in Q1, while search revenue was flat.
- Google Cloud revenue surpassed $30 billion in the quarter, about $1 billion above analysts’ expectations.
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Reported comments: 4 · 3 saved in sample
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Based on 3 sampled comments from this thread. Analyzed 2026-10-30.
The thread mostly treated AI search as a product and business-model problem rather than celebrating Google’s revenue recovery. One commenter argued that search is among AI’s strongest uses: a model that can browse, compress scattered knowledge, and produce a useful summary saves people from opening a pile of pages. In that view, the monetization problem has a cleaner answer than forcing the feature on everyone: offer it as an inexpensive paid option. The pushback was blunt. Critics argued that AI-mediated retrieval already fails the basic search contract when it substitutes fuzzy associations for the exact object or software a person requested. They also expect advertising to make the experience materially worse, not merely more commercial. The comparison was streaming video: an initially convenient transition that led to more unavoidable, more personalized advertising. Several readers saw AI search heading toward the same outcome, with richer behavioral profiling and the likely erosion of anonymous or logged-out access. The only clear upside raised was AI’s potential to synthesize web knowledge efficiently; the dominant concern was that Google will optimize that capability around ads and surveillance rather than dependable retrieval or user control.
The central dispute is whether AI search is a genuinely better way to access knowledge or an unreliable advertising surface. Supporters see web-grounded summarization as a high-value convenience and favor an optional low-cost subscription; critics say it cannot replace precise retrieval and will be paired with more intrusive targeting and less privacy.
- Praise: AI search can compress scattered web knowledge into a useful answer, sparing users the tedious work of opening and reconciling many pages.
- Praise: A small optional fee could fund AI-assisted search without coercing every searcher into an ad-heavy generative interface.
- Concern: AI search is seen as failing the core retrieval task when it returns loose semantic lookalikes instead of the exact animal, tool, or concept requested.
- Concern: More ads in AI results could repeat streaming’s slide from convenience to unavoidable, hyper-targeted commercial interruptions.
- Concern: AI search monetization may intensify surveillance by making persistent identity and behavioral data more valuable, undermining anonymous search access.
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