What Google and Reddit's bad days have in common
AI search is underperforming for Google, and it's killing Reddit's traffic. What now?
On Thursday, Demis Hassabis, Google's AI chief, announced that Gemini 4 Carbon, a new large language model, had topped Intelligence Index from Artificial Analysis. This was a milestone for Google's AI efforts, suggesting a return to form after delays and the perception of falling behind. However, the same day, Google's parent company, Alphabet, had its worst day ever as a public company.
Its stock fell 12.6%, erasing around $500 billion in market value, marking the second-biggest stock market plunge ever, following Nvidia's $593 billion slide in January 2025. Google's biggest one-day decline since the great financial crisis was due to investor worries about the massive scale of its AI infrastructure buildout. Google plans to spend up to $205 billion on capital expenses this year and even more in 2027, with a negative $9 billion in free cash flow.
Meanwhile, Reddit, another company on Thursday, reported its earnings for the quarter and saw its stock drop 15%. The company noted that its traffic from search had fallen significantly, and by the fourth quarter, daily users might decline by a low double-digit percentage. Reddit CEO Steve Huffman stated in a shareholder letter that the company would increasingly push users to log in to use the site.
This change was made to generate more signals for ads targeting and improve engagement. Formerly allowing free access, Reddit would now require users to create accounts.
Written by urgent.news from Platformer's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
