Google Cloud grew its fourth-quarter revenue by 30% from the year before, totaling roughly $12 billion—a nice haul, except for the fact that Google Cloud’s growth rate in the previous quarter was 35%, and analysts were looking for 33% growth this time around, according to CNBC. 

As Alphabet CFO Anat Ashkenazi explained on an earnings call Tuesday, the slowdown was partially attributable to a shortage of supply: Google doesn’t have enough capacity in its data centers to meet all the demand (a problem it hopes to resolve with a massive $75 billion in capital expenditures this year, including 11 new data centers slated for operation). Ashkenazi also pointed out that Google Cloud Platform—a subset of the cloud business with a strong AI component—grew at a faster rate than the overall cloud business. 

Investors weren’t soothed however, with shares of Alphabet down about 8% in after-hours trading. The reaction echoed the Microsoft selloff last week when its cloud business results came in light.

Alphabet executives, including CEO Sundar Pichai, reeled off a series of stats to show the company’s strength. But at the end of the day, Alphabet’s overall business grew at a steady, but hardly exceptional, 12% rate—and, as many of the analyst questions on the earnings call suggested, there are still a lot of questions around how Google’s core search business will weather the AI storm.

Can search be Google’s cash cow in the AI era?

Twenty-six years after Google was founded, search remains the foundation of its business. In the fourth quarter, the “Google Search & other” business accounted for 56% of the company’s $96.5 billion in revenue.

Recognizing the threat that AI chatbots like OpenAI’s ChatGPT could pose to its search cash cow, Google has been quick to integrate AI capabilities into its search engine. AI Overviews, the AI-generated answers that Google has begun inserting at the top of certain search results, are now available in more than 100 countries, the company said Tuesday, and Google is on track to integrate its newest Gemini 2.0 AI model into AI Overviews this year.

Younger users are particularly fond of AI search, Pichai said. And “search usage growth increases over time as people learn that they can ask new types of questions.”

But there’s still a lot we don’t know about how AI search compares with traditional search as a business. The company’s ability to monetize AI search results with ads remains an open question. Google began rolling out ads to AI Overviews in the U.S. in October. So far the company is seeing monetization at approximately the same rate as traditional search ads, Google chief business officer Philipp Schindler said Tuesday, though he did not provide any details.

Another big question is whether consumers who get answers via AI Overviews will consequently conduct fewer overall searches and use Google less. Asked how overall search patterns are holding up, Pichai said that search metrics are “healthy.”  

“We’re continuing to see growth in search on a year-on-year basis in terms of overall usage,” he said.

As AI competitors like OpenAI, Anthropic, and Perplexity try to pull users away from Google’s search box with AI chatbots that serve up all manner of information, while Amazon ramps up efforts to be the go-to site for product searches, Google can’t sit still. 

Pichai hinted at various AI-powered innovations coming to the Google search engine, such as new “multimodal” features in the vein of the existing Lens visual search feature for phones, as well as search tools that use AI agents to conduct longer-term research projects—“things which don’t always get answered instantly, but which take time to answer.”

It’s a concept that might also apply to investors wondering about the future of Google’s search business.