Alphabet is Google’s self-created parent company. On October 29, its stock dropped $500 billion - in a day. 13% of Alphabet’s total value.
We’re being told by many in The Zeitgeist that the drop doesn’t look like what it really, seriously looks like. That it is not a ceased-to-be canary in an imploding Artificial Intelligence (AI) coal mine.
I think it is said canary. Because I think Alphabet’s stock drop was the result of a double negative for the company.
1) Alphabet is hemorrhaging AI cash - just like all the other Big Tech companies making the AI Big Bet. I still think the AI Big Bet is a big bubble that is about to burst.
2) Alphabet’s other, personal problem harmonically converged with the looming burst to make Alphabet the bubble loss leader. That personal problem is Web Search.
I have screwed around with AI a little in a variety of areas. The one thing for which I still return to the AI well? Web Search. Sorry, Google. I use Grok (sorry, Google). I like its results and summary voicing a little better than the others I’ve tried - including Google’s.
Google’s original product was Web Search. Over the decades it successfully abused Big Government cronyism - so as to abuse and corruptly dominate the planet’s marketplaces. The result? Over 90% of the planet’s October 2026 Web searches - were Google searches.
You can collect a LOT of data - and with it generate a LOT of advertisement revenue - from a captive market of that titanic size. That nigh-monopoly domination has been VERY profitable. Even after Thursday’s 13% drop? Alphabet’s Market Cap is (as I type) $3.49 trillion.
These trillions of advertisement dollars have force fed Alphabet expansions into many other areas - many of them profitable. None more profitable than Google Cloud. Which as of Q3 2026 was 24.1% of company revenue.
But even with the other profitable businesses coming online? Search was still Alphabet’s majority revenue source. Until Q3 2026, that is. When it dropped to 49.7%. In Q1 2020? It was 59.5% of revenue.
The Age of AI has not been good for Google Search. Part of the Search revenue percentage drop - is the countervailing growth of Cloud. But part of it is AI Web Search - increasingly replacing Google Web Search.
All that being said? More than a little of Google’s injury has been self-inflicted.
In the Age of AI, when you execute a google.com Web search? At the tippy-top of their results page - is their AI summary of your results.
Which means Google is undercutting its advertisers. Who pay lots of money to get eyeballs on their ads - and to get to the top of the Search results list:
“Google’s AI tools are lowering ad costs and reducing ad visibility in some cases, which can erode advertiser returns….Google’s AI Mode in search - which lets users ask longer, conversational queries - is growing fast but generates less ad revenue than traditional search.
“This is because AI summaries and chatbot responses often reduce the number of clickable ads shown, lowering the ‘monetization’ rate. For advertisers, this means fewer impressions and lower CPMs in AI Mode, which can make campaigns less profitable.…”
The page-topping AI summary? Preempts a LOT of results’ page scrolling - which is where the advertisers pay to live.
Oops, Google.
In Alphabet’s defense, their self-infliction was a little bit inevitable. Because AI in some form is inevitable.
Google had to jump into the race for AI dominance. To salvage the future of their decades’ old Web Search dominance.
People AI Web Searching with any AI other than Google’s? Is devastating to what is still Alphabet’s core revenue generator: The ads - and the data collection behind them.
That being said? Alphabet forgot where their bread is still largely buttered. Google put the AI cart before the Web Search horse.
Perhaps Alphabet should be placing their AI summary at the BOTTOM of Page One of the Web Search results. Rather than at the top.
Or maybe somewhere in the middle - AFTER your largest paying advertisers had been scrolled over.
Just a thought….
Oops, Google.