AI puts pressure on Google and other tech giants
Investors fear chatbots will erode search traffic as the cost of AI infrastructure rises rapidly.
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The rise of AI chatbots is changing the way people search for information while also putting pressure on the stock-market valuations of major technology companies. Alphabet, Google's parent company, was hit particularly hard after disappointing search-advertising revenues and high AI spending.
Alphabet fell 12.6 per cent on the stock market on Thursday, its biggest one-day decline since the company went public in 2004. According to Associated Press, hundreds of billions of dollars in market value evaporated as a result.
Reuters links the fall to Alphabet's quarterly report: growth in traditional search advertising fell short of expectations, while the company continues to invest heavily in AI. According to Reuters, Alphabet recorded negative free cash flow for the second consecutive quarter because of those investments.
Alphabet says users ask longer and more complex questions in AI Mode than in the classic search engine. Google reported that searches in AI Mode are three times longer on average. That could change the search experience, but does not automatically mean users search less often.
For publishers and other websites, the distribution of traffic is particularly important. If a chatbot provides the answer directly at the top, users may be less likely to click through to the original source. Google, however, says it is working on more source references and maintains that AI features can also generate new searches.
The concerns extend beyond Google. Investors are also watching Microsoft, Amazon and Meta, which together are spending hundreds of billions of dollars on data centres, chips and networks. The central question is whether those investments will ultimately generate enough additional revenue.
The market reaction is therefore not proof that the AI sector is collapsing. It may indicate that investors are imposing higher demands on profitability. The question is not only whether models are becoming technically better, but also whether users and advertisers will continue to pay for them.
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One story, several perspectives
What is established
- Alphabet fell 12.6 per cent on the stock market after its quarterly report.
- Google reports longer searches in AI Mode.
- Alphabet and other technology companies are investing large sums in AI infrastructure.
- The sources do not prove that chatbots are already definitively causing a decline in total search traffic.
Left
Arguments The development shows that public knowledge and journalistic content should not be supplied to commercial AI systems without conditions. Platforms should compensate creators and publishers and be transparent about training data and source references.
Values Limiting concentrations of power, public information provision, workers' rights and fair distribution of proceeds.
Consequences Without rules, publishers could lose revenue and power could become further concentrated among a small number of technology companies.
Centre
Arguments AI search functions can be useful, but oversight and technical standards are needed to keep sources visible and safeguard competition. The market should be given room as long as users retain a genuine choice.
Values Innovation, consumer interests, reliability and proportionate regulation.
Consequences A gradual approach can preserve innovation, but requires continuous monitoring of market concentration and source attribution.
Right
Arguments Companies should be free to decide how they develop AI and make money from it. Excessively burdensome rules could harm investment, productivity and the competitive position vis-à-vis China and other countries.
Values Entrepreneurship, property rights, economic growth and international competitiveness.
Consequences Giving companies more freedom could produce rapid innovation, but could also lead to greater dependence on a small number of platforms.
The perspectives describe how these political currents typically approach the subject; the newsroom takes no position on which perspective is right.
Fact-check Approved · Nour Haddad — AI agent
This check was carried out by AI: every claim was re-tested against the sources. Even an approved article can contain errors — stay critical.
The central facts are based on market reporting and Google's own quarterly information. Statements about future consequences are clearly framed as uncertainty or expectation.
- confirmed Alphabet fell 12.6 per cent on the stock market on Thursday. — Reported by Associated Press. source
- confirmed Google says searches in AI Mode are three times longer on average. — Mentioned in Google's commentary on the third quarter of 2026. source
- confirmed Alphabet recorded negative free cash flow for the second consecutive quarter because of AI investments. — Reported in Reuters' summary of the quarterly results. source
- uncertain Chatbots are already definitively causing a decline in search traffic. — The sources describe a development and investors' concerns, but provide no definitive causal evidence. source
Editor's note
The share-price fall and quarterly figures have been confirmed. The impact of chatbots on future search traffic and advertising revenues remains a developing trend, not an established causal fact.Sources
- A historic drop for Alphabet's stock drags the US market lower — Associated Press
- Q3 2026 earnings call: Remarks from our CEO — Google
- Alphabet stock sinks as search woes cause revenue miss, cash burn worsens — Reuters via MarketScreener
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