Google is bringing ads into its AI-powered search experiences to international markets for the first time, betting that generative AI can open up new revenue just as growth in its core search advertising business slows. The expansion was announced Wednesday during Alphabet's third-quarter earnings call. Shares of the parent company fell 8 percent after the results.
Is Google Search revenue still growing?
Alphabet reported $127.6 billion in revenue for the quarter, up 25 percent year over year. Google Search revenue grew 12 percent, a clear slowdown from 17 percent growth in the second quarter and 19 percent in the first. Google Services, which includes Search, brought in $96.3 billion, up 11 percent. The fastest-growing piece of the business was Google Cloud, where revenue surged 103 percent to $30.7 billion.
Why is Google bringing ads into AI Mode overseas?
Philipp Schindler, Google's chief business officer, laid out the plan on the call. “We are now scaling high-quality ads within AI overviews in AI mode to more users and queries,” he told investors. “This includes taking our monetization footprint global for the first time.” Google is also extending ads in AI Mode to international markets, alongside multi-turn ads and AI Mode in the United States.
How are ads in AI Mode performing so far?
Google says early numbers look encouraging. Click-through rates for sponsored product listings in AI Mode are already comparable to those for organic listings, Schindler said. The company's own user research also suggests people find the ads relevant to what they are searching for.
The push builds on new ad formats Google introduced in May, powered by its Gemini models. Those include conversational discovery ads that respond directly to a user's questions, and sponsored recommendations woven into AI-generated answers.
Search chief Sundar Pichai said queries grew at their fastest year-over-year rate in five years, though he did not disclose the exact figure. He credited AI features with changing how people use the product. “Our AI investments are driving overall Search query growth, including commercial queries,” Pichai said in a statement.
The behavior shift is visible in the numbers Google shared. Queries in AI Mode are three times longer on average than traditional searches, Pichai said. One in five AI Mode searches worldwide involves voice, images, or documents, and Google now handles more than 50 billion visual searches per month.
“People are using our AI features more, searching in entirely new ways,” Pichai told investors. “Their queries are longer, personalized, and multimodal.”
The quarter was busy beyond search. Google released its Gemini 4 Argon frontier model widely this month, and the Gemini app crossed 1 billion monthly users. The company also launched its Pixel 11 smartphone line, a new Pixel Watch, and said a Pixel Tag is coming. Alphabet reported that its YouTube Music and Premium services passed 150 million subscribers globally, though that figure includes free trials.
Leadership also shifted. Former DeepMind leader Demis Hassabis stepped into a chair role as part of a broader shakeup of Google's top AI leadership.
For Google, the central question now is whether its AI features can turn heavier, more complex search use into advertising revenue that matches the scale of its traditional business. The company's latest numbers show strong engagement with AI search, a trend with clear implications for AI search optimization, but also a core ad business that is growing more slowly than it did earlier this year.
This article was written with the assistance of AI.
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