The internet is 'dying': AI is eating it and obliterating these business models
AI is disrupting internet search, impacting companies like Apple (AAPL), Reddit (RDDT), and Google (GOOG, GOOGL). Apple reported slower services growth due to third-party licensing challenges. Reddit saw a 29% stock drop after reporting declines in search traffic. Google's search revenue growth slowed to 12% in Q3. Fiverr (FVRR) and LegalZoom (LZ) also cited AI's impact on their businesses.
How this was made
The 30-second read
Why it matters
Broad‑based pressure on search‑dependent revenue streams may lead to re‑rating of affected stocks.
Market read
AI‑driven search is emerging as a systemic risk factor for internet‑centric businesses, potentially reshaping sector valuations.
What to watch
Potential upside for companies that integrate AI search APIs or develop proprietary AI content pipelines.
Background
The article surveys how AI search summaries are reshaping traffic flows and revenue models for a range of internet‑based businesses.
Ticker impact
Apple warned of slower services sales growth for the December quarter, citing AI‑driven search competition.
likely pressure as investors price in slower growth
New guidance suggests reduced revenue, which may weigh on the stock in the near term.
Reddit’s earnings call revealed a >1 million weekly drop in search referrals and its stock fell 29% after the report.
downward pressure as lower traffic hurts ad revenue
The disclosed traffic loss directly impacts revenue outlook, reinforcing the recent price drop.
Alphabet reported a slowdown in search‑ad revenue growth to 12% YoY and warned of further pressure from AI Overviews.
potential downside as investors reassess growth trajectory
The slowdown is a fresh data point that could trigger a re‑rating of the stock.
Same as GOOG – Alphabet’s dual‑class shares saw a 10% drop after the revenue growth warning.
likely pressure mirroring GOOG
Dual‑class shares move in tandem with the primary ticker on material news.
Fiverr reported a 15.8% YoY revenue decline and cited AI‑driven SEO disruption as a key headwind.
downward pressure as growth outlook weakens
The company’s own commentary ties AI to lower demand, affecting future earnings.
LegalZoom noted lower customer acquisition from Google search due to AI Overviews in its latest update.
potential downside if acquisition costs rise
The comment signals a risk but lacks quantified financial impact.
Campbell’s warned that AI‑driven shopping agents could reduce product discovery and affect marketing effectiveness.
minor pressure if the risk materializes
The statement is qualitative and does not include immediate financial metrics.
1‑800‑Flowers highlighted AI‑driven search risks that could lower website traffic and product visibility.
slight downside risk
The risk is noted but not yet reflected in earnings or guidance.
Market effects
AI‑driven search changes could compress margins for internet‑dependent media and e‑commerce firms.
U.S. tech and consumer‑discretionary stocks may see broader pressure.
The trend is global, affecting advertisers and platforms worldwide.
Counterpoint
Some analysts argue AI overviews could funnel more traffic to platforms that host the AI, benefiting large tech owners.
Key entities
- companyApple Inc.
Technology hardware and services provider.
- companyAlphabet Inc.
Owner of Google search and advertising platforms.
- companyReddit Inc.
Social media and community platform.
