I mentioned at the end of July that growth in Google Search ad revenue might not be as healthy as it seemed, and that the effects of AI-driven traffic diversion and monetization challenges would gradually become apparent.
This time, $GOOG’s Q3 results confirmed that view: Search revenue was $63.3 billion (+12%), with growth slowing sharply from 17% the previous quarter and coming in below expectations. Google itself also acknowledged that weak monetization in AI Mode was one of the factors weighing on results. Overall ad revenue missed expectations, and the stock fell about 10% after hours.
Cloud revenue may have doubled, but Search—the core money-printing machine—is already slowing down, while huge AI capital expenditures have pushed FCF into negative territory.
There was good reason to remain cautious before, and I’ll continue to be cautious here. I’m a little worried that funds could turn Google into a “funding short,” just as $Meta’s stock performed quite poorly for a while before Reels took off.
Source: https://x.com/i/web/status/2080340785887891483
This time, $GOOG’s Q3 results confirmed that view: Search revenue was $63.3 billion (+12%), with growth slowing sharply from 17% the previous quarter and coming in below expectations. Google itself also acknowledged that weak monetization in AI Mode was one of the factors weighing on results. Overall ad revenue missed expectations, and the stock fell about 10% after hours.
Cloud revenue may have doubled, but Search—the core money-printing machine—is already slowing down, while huge AI capital expenditures have pushed FCF into negative territory.
There was good reason to remain cautious before, and I’ll continue to be cautious here. I’m a little worried that funds could turn Google into a “funding short,” just as $Meta’s stock performed quite poorly for a while before Reels took off.
Source: https://x.com/i/web/status/2080340785887891483