Alphabet miss exposes Google’s AI search trade-off

Alphabet fell short of Wall Street’s revenue and profit forecasts even as sales rose 25% from a year earlier, putting fresh attention on Google’s core search business. Google said query growth was its strongest in five years, helped by AI Mode, its chat-style way of searching. But the company also said the rapid growth of AI Mode weighed on search revenue because it currently makes less money per query than traditional results, where ads sit beside links. That is the hard part of Google’s AI transition: it is attracting more searches while disrupting the ad format that generates roughly half of Alphabet’s revenue. Cloud sales more than doubled on AI demand, but investors are now watching whether Google can make AI search as profitable as the old model.