Google stock falls as AI Mode earns less than classic search

Google shares dropped as much as 10% after earnings. Cloud revenue more than doubled to $30.7 billion, but search revenue grew only 12%, below expectations. Google acknowledged AI Mode monetizes less than traditional search and is expanding AI Mode ads internationally.

Why it matters: This is the first clear financial evidence of the cannibalization risk long attached to AI search: users shift to a format that earns less per query. Strong cloud growth shows Google profiting from AI infrastructure demand while its core ad business is under pressure, and ad expansion will be the key test of whether AI Mode can close the gap.