Reddit stock plunges 28% as Google AI cuts US traffic

Reddit shares fell 28% after reporting that Google's AI-generated search results are reducing traffic to the platform in the United States. The transmission channel here runs through user acquisition and advertising inventory: Reddit depends heavily on search referrals to drive logged-out visitors, and any reduction in those flows weakens both its ad impressions and its ability to convert casual readers into registered users. Reddit is the most directly exposed, while Alphabet's GOOGL and GOOG shares are affected more indirectly, since the headline frames Google's own product changes as the source of the traffic decline and raises questions about search monetization and publisher relationships. The next catalyst traders will watch is Alphabet's upcoming quarterly earnings, where management commentary on search query volume, AI Overviews adoption, and ad revenue per query will indicate whether the traffic shift is material to Google's core business.

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