Google AI search just handed its own parent company a hefty bill. According to the BBC, Alphabet, the owner of Google, lost just over $500 billion in market value on Thursday. The drop came after the company told investors that the AI-generated summaries in search had affected ad revenue. The shares hit their lowest level in six months.
The message goes beyond Wall Street. If even Google feels the pinch from ready-made answers at the top of the page, anyone who relies on organic traffic or invests in search ads has good reason to pay attention. Below, you will find the numbers from the quarter and what this shift could mean for SEO, marketing and paid traffic in Brazil.
According to the BBC report, the company shares fell almost 13% on the day, one of the worst performances for the stock this year. As a result, the Alphabet market value shrank from $3.97 trillion to $3.46 trillion overnight.
The odd part is that, at first glance, the earnings report did not look bad at all. Total revenue grew 25% compared with the previous year and reached $127.6 billion, driven by Google Cloud, which jumped 103% to almost $31 billion. The problem was on the other side of the ledger.
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Profit fell 25% in the quarter. And free cash flow was negative by more than $9 billion, according to the BBC, nearly double the figure from three months earlier. This is only the second time that has happened since Alphabet went public. In practice, the company is spending more than it brings in, and this new level of spending goes almost entirely into AI investments. To compare with what the company had been showing before, you can revisit the period when Alphabet revenue got a boost from AI and Gemini.
Why AI summaries affect ads
The explanation is simpler than it seems. Today, Google search shows an AI-generated summary for the user query by default, a feature the company calls AI Overviews. According to the BBC, this reduced the number of ads Google was able to sell during the quarter.
And that is the sensitive point in the relationship between AI Overviews and ad revenue. The ads shown next to search results make up the vast majority of the Alphabet business. The logic behind the concern is straightforward: when the answer already shows up at the top of the screen, the user has less reason to keep scrolling through the page. And less scrolling means fewer chances to see an ad.
For Tracy Woo, a Forrester analyst interviewed by the BBC, the weak search result shows how hard it is to fund huge AI investments without weakening the businesses that already keep the company running. On the Google side, chief business officer Phillip Schindler said on Wednesday that he feels good about the direction of the AI-focused version of search.
The market, it seems, has not bought that confidence yet. This gap between promise and perception has come up before, when we covered the trust and UX problem with Google Overviews.
Amazon and Microsoft were also part of the picture
The skepticism was not limited to Google, but each case had its own twist. Amazon, according to the BBC, saw its shares fall 6% in after-hours trading. Sales rose 11% to $201 billion, but cash flow was negative by $42 billion. CEO Andy Jassy defended the spending by saying the company has a shot at building two businesses that could each bring in $1 trillion down the road, without saying which ones.
With Microsoft, the reaction was more muted. Its shares dipped less than 1%, even though the company spent about $5 billion less on AI investments and posted revenue 19% higher, at $92.3 billion. For Woo, the market is trying to look further ahead and figure out where, in the end, the value of AI will land.
What changes for marketing, SEO and paid traffic in Brazil
The report does not mention the Brazilian market. Even so, there are a few lessons for anyone who works with search here.
In SEO, the impact of AI on SEO is likely to become more visible. If the answer already appears at the top, fewer people will probably click on the links. That is why it may pay off to create clear, trustworthy and well-structured content that has a chance of being cited in the summaries themselves. Owned channels, like newsletters and communities, also carry more weight, since they do not depend on algorithm changes. The debate over how search is changing had already been heating up, as we covered in SEO and AI Agents: what Google said about it.
In paid traffic in Brazil, the situation calls for caution. Google needs to protect its main source of revenue, so changes to ad formats or to the space available on the page would not come as a surprise. Nobody knows yet how this will play out. Instead of trying to guess, the safest path is to keep a close eye on metrics like cost per click, click-through rate and conversions, and react quickly when something looks off.
For business owners, the lesson is an old one, but it has become more urgent: relying on a single acquisition channel is risky. Picture an online store that gets almost all of its customers through search. A change in the way Google displays results could turn into a headache overnight.
One thing seems clear. Google shows no sign of backing away from AI search, and the market will watch every upcoming earnings report closely. Here, we will keep tracking these moves in the AI and business coverage at Método Viral.
