Search Is Dead

The post Search Is Dead appeared first on 24/7 Wall St..

Have a look at Alphabet’s (NASDAQ: GOOG) results. Maybe adding AI wasn’t such a good idea. When Google launched AI in its search function, its engineers wrote, “We’re bringing our advanced model capabilities to Search with new AI features, enabling you to use agents just by asking a question.” Chief Business Officer Philipp Schindler acknowledged that the rapid adoption of AI Mode and AI Overviews (which drove a 5-year high in overall query growth) weighed on quarterly results because AI-generated search queries currently feature ‘lower monetization’ than traditional ad-supported search links. (Gemini generated this summary of his comments as a test.)

For some time, the theory has been that people would use AI apps to replace search. Experts said this approach was stupid. AI had been built to handle much more complicated tasks. Using it as a search engine created bad habits. People who use it this way will never understand AI’s power.

Google has driven Alphabet’s growth since it launched in 1998. In the most recent quarter, “Google Search & other” was up 11% to $63.4 billion. Total revenue rose 24% to $127.6 billion. Thomas Monteiro, senior analyst at Investing.com, looked at the results and worried things would continue to go south: “Until Google shows it can charge for AI the way it once charged for search ads.” Given Google’s amazing run making money on search, the worry is reasonable.

Google’s share of the search market worldwide outside of China and Russia is 89%. Several companies have tried to take a piece of that, including Microsoft’s Bing. One theory is that people are so used to using Google that the brand, just as much as the accuracy of the results, makes Google so successful. That will be debated for a long time.

But here is the crux of the matter: Companies like Ford (and every other legacy car company in the world) thought that EVs were the wave of the future. Granted, they all sold some EVs. Granted, it may have dented their gas-powered car sales. But their old business is what made them profitable. As search dies, Alphabet has not been able to prove it has found a replacement. Google=profit. AI not so much

The post Search Is Dead appeared first on 24/7 Wall St..