The Motley Fool on $GOOGL (Nov 6, 2026)
The speaker sees Alphabet's core search business as seriously challenged: most searches now end in AI summaries that are harder to monetize, search supplies the vast majority of operating profit, and hurt downstream customers should transmit pressure upstream; LLMs make ad integration harder and may price out smaller advertisers. He gives Alphabet benefit of the doubt that it may adapt and still generate cash, and thinks it may turn out okay, but says the old search model will not be replicated, uncertainty is high, and investors are right to weigh this for Alphabet shares.
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We went through this with Alphabet. Uh it was only what 18 months ago, right? Search is dead. C turns out search wasn't dead. Maybe it's the growth actually for this past quarter.
Are we sure that search, Google search specifically, is in trouble? I am sure Google search is in trouble. the market and lots of other very smart people may disagree with me here, but the reason I say that is because we have seen a fundamental change in the way that acquisitions are happening for Google's downstream customers on Google search.
They talked about it last quarter. A majority of these searches are now ending with their AI summaries. Those are much harder in my opinion for Alphabet to figure out how to monetize.
Alphabet has a diversified business, but the majority of their operating profit, the vast majority of it still comes from Google search. So I think there is a big question mark for Alphabet, for Google search and search in general about how we monetize that in the world of LLMs.
And if your downstream customers are being hurt that badly, then only a matter of time before that flows upstream.
they haven't been able to monetize it as well. I don't necessarily assume there that they won't figure it out or they won't be able to evolve and it's still going to be a massive pile of cash for them.
Even if it's a different kind of cash, I give them some benefit of the doubt to figure that out. But search as we knew it 5 years ago is in serious trouble and there isn't the certainty of what tomorrow looks like.
And I think that is I I I think investors are right to weigh on the kind of to weigh that when they consider Alphabet shares. even if I do kind of think it'll all turn out okay for them.
Nope. And the reason I say that is because every time you clicked on that link from Google, Google got paid for that. And you know what? They could put as many sponsored links as they wanted at the top of that Google search and you'd scroll until you got the one you wanted.
You click on it, Google got paid. It's much, in my opinion, so far we have seen it is much harder for a large language models to integrate ads into their answers, at least at the same rates that they have been in the past, especially when it refers to the quantity of ads.
And I actually think that a majority of the ads being placed on Google's platforms again coming from small to medium businesses can't afford. If we're going to have less ads for more expensive prices, which I think is a thesis for a lot of these large language model providers, you're pricing a lot of people out the market.
Where are they going? Well, they're going to Meta. They're going to um YouTube, which again did owned by Alphabet, which is great, but they're going to short form content that is more likely to get them clickthrough as opposed to one answer in a large language model.
So, yeah, I'm not saying that Google can't figure it out. They're certainly trying to, but I do not think that that's going to replicate the incredible business model that Google search has had up over the course of the past 20 years. I think that is a very big challenge for them.
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