Google’s Lower AI Mode Earnings And Reddit’s Traffic Report, Explained

🔍 Read the full analysis: Google’s Lower AI Mode Earnings And Reddit’s Traffic Report, Explained on ThorstenMeyerAI.com

Google said fast growth in its AI Mode search experience weighed on Search revenue growth because the queries were generating less revenue than other searches, while Reddit CEO Steve Huffman said the feature does not send traffic to Reddit. Alphabet’s Search revenue nevertheless grew 12% to $63.35 billion in the third quarter, and the company did not quantify AI Mode’s financial effect.

Alphabet business chief Philipp Schindler discussed the issue on the company’s October 28 earnings call, responding to a question about why search activity was growing at its fastest pace in five years while revenue growth had slowed. He named three factors: currency movements, changes in retail and media spending, and lower monetization of rapidly growing AI Mode queries. He described foreign exchange as the largest factor in the Search growth slowdown relative to the previous quarter.

Schindler did not provide a dollar estimate for AI Mode’s effect or say how much less revenue an AI Mode query earns. Alphabet’s quarterly filing, submitted October 29, did not mention AI Mode; it cited query growth, advertiser spending and improvements to advertising formats and delivery as factors in Search performance. The company’s reported Search revenue continued to rise, so the call described pressure on the growth rate, not a decline in Search revenue.

Reddit CEO Steve Huffman offered a separate view of the product’s web impact. According to the source, he said AI Mode does not drive traffic “not for us and not to anybody, as far as I know.” That is his assessment, not a measured account of all websites’ referrals. The source also reports a 12.6% fall in Alphabet Class A shares on October 29, with estimates of lost market value varying by outlet. A claim of a 15% closing drop is not supported by the cited figures.

AI Answers and the Value of Referrals

The issue reaches beyond Google’s earnings because search has traditionally connected people with websites, retailers and publishers. If users get answers directly in an AI interface, they may have less reason to click through. That could alter how businesses attract audiences and earn advertising or sales revenue, even if Google’s own search business continues to grow.

The source cites Chartbeat data showing Google Search’s share of pageviews across its publisher network fell from about 9% in July 2024 to 5% in July 2026. It also cites a Pew study in which users clicked a result in 8% of visits when an AI summary appeared, compared with 15% when it did not. Those figures describe different measures and do not, by themselves, establish that AI Mode caused the changes. They do help explain why publishers are watching referral patterns as Google adds more AI-generated answers.

For investors, the earnings call presents a monetization question: Google says AI Mode queries are growing, but it has not disclosed revenue per query or the extent to which advertising can close the gap. The share-price fall also came amid concerns about cash flow and investment spending. The market reaction cannot be attributed to AI Mode alone.

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What Alphabet Said on the Call

The discussion followed a question from JPMorgan analyst Doug Anmuth about the difference between fast query growth and slower Search revenue growth. Schindler listed exchange rates first, followed by conditions affecting some Asia-Pacific retailers and a normalization in media spending after the football World Cup. He then said strong AI Mode query growth had an impact because monetization was lower in that experience.

Alphabet also reported $51.4 billion in quarterly spending on data centers and chips, according to the supplied source. It said free cash flow was negative $9.1 billion, compared with analyst expectations of roughly negative $2.7 billion, as reported by CNBC. These figures provide additional context for the stock decline but do not show how much of the market reaction reflected AI Mode.

The source says Google previously stated in July that its AI features sent “billions of clicks to websites every week.” It reports no equivalent traffic figure in the October earnings call. It also describes regulatory and commercial developments: UK rules require Google to offer an AI opt-out, the European Union is investigating, five French publisher groups filed a complaint on October 29, and Google has a licensing pilot involving more than 400 publications. Those developments concern different aspects of AI search and do not establish the outcome of any investigation or complaint.

„The strong growth in AI Mode queries had an impact because of the lower monetization we were seeing in AI Mode.“

— Philipp Schindler, Google business chief, on Alphabet’s October 28 earnings call

The Missing Revenue and Traffic Measures

Google has not disclosed the revenue per AI Mode query, the total revenue effect, or the proportion of Search activity now taking place in AI Mode. Without those figures, the scale of the monetization difference cannot be calculated from the statements described here. Alphabet’s filing also does not provide a separate AI Mode revenue line.

The wider traffic picture is incomplete. Huffman’s statement is an executive’s assessment, while the Chartbeat and Pew figures cover particular samples and measures. The available information does not show how AI Mode alone changes visits to publishers, forums or retailers, or whether users who do not click still complete purchases or find information. The precise contribution of AI Mode to Alphabet’s stock decline is also unknown, given the other financial concerns reported at the time.

More Data on Ads and Website Visits

Readers and publishers will be looking for updated traffic figures from Google and independent measurements that separate AI Mode from other search features. Alphabet may also offer more detail in future earnings calls about query growth, ad placement and monetization, though no specific disclosure or date is confirmed in the supplied material.

Regulatory proceedings and publisher complaints may add information about how Google’s AI search features affect links, licensing and user choice. For now, the confirmed earnings picture is narrower: Search revenue grew, AI Mode was one of several factors cited in slower growth, and Google did not quantify its effect. Whether the product can generate comparable value for Google while continuing to send useful visits to other sites remains an open question.

Key Questions

Did Google say AI Mode caused Search revenue to fall?

No. Alphabet reported that Search revenue rose 12% to $63.35 billion in the third quarter. Schindler said lower monetization of AI Mode queries weighed on revenue growth, but did not say Search revenue had fallen.

How much revenue does Google lose from AI Mode?

The amount is not disclosed. Schindler provided no dollar figure or estimate of the difference in revenue per query.

Did Alphabet shares fall 15%?

The source reports a 12.6% decline in Alphabet Class A shares on October 29. It says the claim of a 15% fall at the close is not supported by the cited reports.

Does AI Mode send traffic to websites?

The available information does not settle that question for all websites. Reddit CEO Steve Huffman said the feature did not drive traffic to Reddit, while Google had previously said its AI features sent billions of weekly clicks. The source reports no comparable figure from the October earnings call.

What else contributed to slower Search revenue growth?

Schindler cited foreign exchange first, followed by retail and media spending conditions, as well as lower monetization in AI Mode. The source also reports that Alphabet’s stock decline coincided with concerns about cash flow and spending on data centers and chips.

Source: ThorstenMeyerAI.com