Google Eats Its Own Tail (and Profits) With AI Summaries as Stock Price Plunges

Big tech firms have poured an infinite amount of money into artificial intelligence development and rolled out tools without any consideration as to whether consumers actually want them or not, all based on the theory that eventually they’ll figure out how to turn a profit. Instead, early returns seem to suggest they’ve simply figured out a way to eat their own profits without an obvious way to replace that revenue stream.

That is at least the case for Google, which, on a Wednesday earnings call, revealed that its “AI Mode” has cut into its traditional search and advertising business. Philipp Schindler, chief business officer at Google, said that the AI-generated responses that Google now overwhelmingly serves to users whenever they search for anything have made it more difficult for Google to monetize results, cutting into its usually extremely profitable advertising business and contributing to the company missing its revenue projections in its latest earnings call.

To be clear, Google’s search advertising business remains a massive moneymaker. It generated $63.4 billion in the third quarter of 2026, up 12% year over year. But that still fell roughly $1.6 billion short of Wall Street’s expectations, with analysts forecasting roughly 15% growth.

It fell well short of that, by stock market standards, and now it’s taking a hit for it. Per Bloomberg, the company’s share price tumbled as much as 13% on Thursday, a day after releasing its quarterly earnings report, and lost more than $500 billion from its market value—the largest ever single-day loss that the search giant has ever experienced.

Part of the reason for the steep sell-off likely has to do with the fact that Google still has a significant amount of money tied up in its AI buildout, which we now know is not just burning through the company’s coffers as it spends tons on model training, compute, and infrastructure, but is also eating into its profits on the other end without an obvious path to profitability other than hoping more people fork over cash for a Gemini subscription.

Per the Financial Times, Google’s capital expenditure jumped from $44.9 billion in the second quarter to $51.3 billion in Q3, meaning its spending, primarily on AI, keeps ballooning. Expectation is that the fourth quarter will see as much as $73 billion spent on capex, so there are no signs of stopping. Plus, the company reportedly has future commitments for data centers, energy, and other costs that exceed $1 trillion.

Basically, Google is pot committed to borrowing and spending money to develop a technology that, as of today, is hurting its actual revenue-generating businesses. Maybe that’s a slight bit of respite for the more petty amongst us the next time you get an AI Mode response to a Google search that has actively bad information: Sure, you didn’t get a good answer, but at least it cost Google money.