Reddit shares tumble 30% after CEO warns Google AI is cutting search referrals

Reddit shares fell roughly 30% after its CEO warned that Google's AI-generated search results are reducing the referral traffic that flows from Google Search to Reddit's platform. The mechanism at work is a traffic-dependency channel: a meaningful share of Reddit's user acquisition and logged-out engagement depends on search discovery, so any structural decline in referrals feeds directly into user growth expectations and, by extension, advertising revenue forecasts. Alphabet's GOOGL and GOOG shares are exposed through the reverse side of this dynamic, since the warning highlights how AI Overviews may be reshaping click distribution across the web, a question that bears on Google's search monetization and on the value of the content ecosystem it indexes. Traders should watch Alphabet's next quarterly earnings commentary on search revenue and AI Overview adoption, along with any disclosed changes to publisher and platform traffic metrics, as the clearest signal of whether this is an isolated Reddit issue or a broader reallocation of search-driven web traffic.

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