Google expands ads in AI Mode as $GOOG stock faces AI-related pressure

Google is bringing ads to AI Mode globally as it admits that the new take on Search brings “lower monetization,” all while $GOOG stock is seeing a fairly major drop. Alphabet’s Q3 earnings call saw Google’s Philipp Schindler acknowledge that AI Mode, the company’s Gemini-powered new take on Search, has “lower monetization” compared to traditional Search ^[1].

Key facts * Google is scaling ads within both AI Overviews and AI Mode to more users and more queries ^[1]. * $GOOG stock dipped by 27 points around the earnings call and continued to drop on 29 October ^[1]. * The 12% drop in stock value reduces Google’s market cap by over $500 billion ^[1]. * Google plans to expand AI Mode ads to Brazil, Mexico, and the United Kingdom in Q4 2026 ^[1].

Why is the stock dropping? The drop in $GOOG stock is attributed to weaker-than-expected earnings in Q3 rather than AI Mode itself ^[1]. Investors are expressing concern regarding the capital expenditure tied up in future data center buildouts and the potential for a bubble burst ^[1]. There is also a significant question regarding whether Google can sufficiently monetize AI-powered search before demand for traditional search inventory falls off a cliff ^[1].

Where will the new ads appear? Google is scaling ads in AI Mode across Australia, Canada, India, Kenya, Malaysia, New Zealand, Nigeria, Pakistan, the Philippines, and Singapore ^[1]. US users will also begin to see “multiturn ads” in follow-up queries ^[1]. The company intends to expand these ads to additional locales, including Brazil, Mexico, and the United Kingdom, during Q4 2026 ^[1].

How does AI Mode compare to traditional search? AI Mode and AI Overviews keep people on Google for three times as long as traditional search ^[1]. While AI Mode has shown strong growth in queries, it currently generates less revenue than the traditional Search model ^[1]. Research from Google indicates that users find ads in AI Mode to be highly relevant, with click-through rates already similar between sponsored and organic product list items ^[1].