Alphabet Misses Ad Revenue Estimates, Burns Billions in Cash on AI

The slowdown in search advertising growth was attributed to a greater use of AI Mode, a chatbot interface for the search engine, on which the company is still experimenting with ads. Google would begin rolling out advertisements in AI Mode to international markets. The company’s core search advertising business saw a slowdown in growth, while Google Cloud revenue more than doubled to $30.71-billion in the third quarter.

Alphabet’s negative free cash flow of US$9.1-billion fell short of analyst expectations, and was its second straight quarter of negative free cash flow. The company’s huge costs of the AI build-out are a concern for investors, who are worried about potential overspending and falling behind rivals.