The search and cloud computing giant posted some disappointing third-quarter financial results this week. Its cash flow for the quarter was negative $9.1 billion, thanks in large part to $50 billion in AI spending. According to the FT, this is only the second time the company posted negative cash flow since it debuted on the stock exchange in 2004. Revenue in its largest division, search, grew 12% year over year, which sounds impressive — except that the growth rate was up at 19% earlier this year.
The culprit for these weak results? In large part, according to reporting in Bloomberg, it was worse-than-expected Google Search ad sales, which came in at $63.35 billion when investors hoped for $64.85 billion. Thanks to the introduction of AI Overviews and AI Mode answering users’ queries, Google had less opportunity to push advertising, Bloomberg columnist Dave Lee writes.
The AI overviews feature famously once told users to eat rocks — and now it’s giving the same treatment to its parent company.
The downside of instant answers
In the past few years, Google has been leaning into AI for literally everything it does, including search results. At its annual I/O developer conference in Mountain View, Alphabet CEO Sundar Pichai introduced a “reimagined” Search box — what Google called its biggest upgrade in 25 years — that now accepts text, images, files, video and open Chrome tabs, alongside a fleet of autonomous “information agents” powered by its new Gemini 3.5 Flash model that can monitor the web 24/7 and deliver synthesized answers without users ever needing to type a follow-up question.
Most crucially, AI Mode — the conversational interface that bypasses the traditional list of ranked blue links — is now a core part of the Search experience. Google says AI Mode has crossed one billion monthly users. Now, that number is only expected to grow.
It’s been a long time coming. AI Overviews, launched in May 2024, turned the prime Google real estate — the top of the search results page — into a closed-off box that attempted to answer users’ questions while pushing results from publishers lower down the page. In Search, you can now choose AI Mode from the start, or hit the “plus” icon to do an AI Search with “rich input or advanced tools,” according to Google.
A financial death blow to content creators
With the traditional “blue links” — publishers, blogs, news sites, government resources and more — falling in importance in Google search results, publishers are suffering.
A Pew Research Center study of 900 U.S. adults found that users who encountered an AI summary clicked a traditional search result just 8% of the time, compared with 15% without one.
Publishers have responded in various ways. Penske Media Corp., publisher of Rolling Stone, Variety and Billboard, filed a 101-page antitrust suit against Google in September 2025, accusing the company of “cannibalizing” publisher traffic.
