Google expands AI Search ads globally as core ad growth slows

International rollout of AI-driven advertising

During Alphabet’s third‑quarter earnings call on Wednesday, Google announced it will extend ads embedded in its AI‑powered Search experience to markets outside the United States. The decision aims to tap generative AI as a new revenue stream while the traditional search advertising segment shows a slowdown.

Alphabet reported total revenue of $127.6 billion for the quarter, a 25 percent increase year over year. Despite the overall growth, Search advertising expansion continued to decelerate, prompting an 8 percent drop in Alphabet’s share price after the results were released.

Declining search revenue and the push for AI monetization

Google Search revenue for the third quarter rose 12 percent compared with the same period last year, a decline from the 17 percent growth recorded in the second quarter and the 19 percent growth in the first quarter. The slowdown intensifies pressure on Google to convert its expanding AI capabilities into a material source of advertising income.

Chief Business Officer Philipp Schindler told investors, “We are now scaling high‑quality ads within AI overviews in AI mode to more users and queries. This includes taking our monetization footprint global for the first time. Today, we’re announcing the expansion of ads in AI mode into international markets alongside multi‑turn ads and AI mode in the U.S.”

“We are now scaling high‑quality ads within AI overviews in AI mode to more users and queries,” said Philipp Schindler, Google’s chief business officer.

Early data indicate the new formats are effective. Click‑through rates for sponsored product listings in AI Mode are already on par with those for organic listings, according to Schindler. Internal user research also found that users perceive the ads as relevant.

The initiative builds on Google’s May reveal of Gemini‑powered ad formats, which include conversational discovery ads that answer user questions and sponsored recommendations woven into AI‑generated responses.

AI reshaping search behavior

CEO Sundar Pichai reported that overall Search queries grew at their fastest year‑over‑year pace in five years, though he did not specify the exact rate. He attributed the change to AI features that encourage longer and more complex queries.

Queries in AI Mode are, on average, three times longer than traditional searches, Pichai noted. Additionally, one in five AI Mode searches worldwide involve voice, images, or documents. Google also announced it has surpassed 50 billion visual searches per month.

“Search is bringing the benefits of AI to more people than any other product in the world,” Pichai told investors. “People are using our AI features more, searching in entirely new ways. Their queries are longer, personalized, and multimodal.”

Alphabet’s Google Services division, encompassing Search, generated $96.3 billion in revenue, an 11 percent increase year over year. Google Cloud revenue surged 103 percent to $30.7 billion.

Broader product momentum

The quarterly results follow a period of significant product activity for Google. The company released Gemini 4 Argon, the Gemini app crossed one billion monthly users, and the Pixel 11 smartphone lineup launched.