Google's Share Price Plunges as AI Changes the Future of Search

Google released its latest financial results this week, and there was something really interesting in them.

They actually had a fantastic quarter.

Revenue was up 25%, their cloud business more than doubled, operating profit was up 30%, and their Gemini AI app has now reached a billion users.

Pretty impressive figures.

But here's the interesting part.

Despite all that good news, Google's parent company, Alphabet, saw its share price drop by more than 12% in a single day.

That's nearly half a trillion US dollars wiped off the company's market value.

Now, there were a few reasons for that, including the enormous amount Google is spending on AI.

Google Search Is Still Growing, But Not as Quickly

But one of the things that caught my attention was what happened with Google Search.

Google's search advertising revenue is still growing. It was up 12% compared with last year.

But in the previous quarter, that growth was 17%.

So it's still growing, just not as quickly.

And here's what makes that interesting.

Google says people are actually searching more, with search activity growing at its fastest rate in five years.

So more searches, but slower revenue growth.

How AI Is Changing the Way We Search

And I think this tells us something about how AI is changing the way we use the internet.

Think about how you look for information now.

A couple of years ago, you might have typed a question into Google, looked through the results, opened a few websites and found your answer.

Now, increasingly, people are just asking ChatGPT, Gemini or another AI tool.

And Google itself is moving in that direction with AI Mode.

Instead of giving you a list of websites, AI can give you the answer directly.

The problem for Google is that those AI searches don't yet generate as much advertising revenue as traditional searches.

So Google is investing billions in technology that's changing its own very successful business model.

What Does This Mean for Businesses?

And for those of us running businesses, I think there's an important lesson here.

For years, we've concentrated on getting our websites found in Google.

And that's still important.

But we also need to start thinking about how our businesses get found and recommended by AI.

Because the way people discover products, services and businesses is changing.

Google isn't going anywhere, and traditional search certainly isn't dead.

But when a company as successful as Google can deliver results like these and still see its share price fall so dramatically, it's worth paying attention.

I think we're watching a pretty significant change in how the internet works.