Google expands AI Search ads globally as ad growth slows

Google is expanding ads inside its AI-powered Search experiences, AI Overviews and AI Mode, into international markets, betting that generative AI can open fresh revenue streams even as growth in its core search-ad business slows. The move came Wednesday on Alphabet’s third-quarter earnings call, where Alphabet reported revenue of $127.6 billion, up 25% from the same period last year; Alphabet shares still fell 8% after the results.

Search advertising growth kept decelerating: Google Search revenue rose 12% from a year earlier in the third quarter, down from 19% in the first quarter and 17% in the second — a slide that raises the stakes on turning AI features into real ad dollars. “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, on the earnings call, adding that the rollout marks the first time the company’s AI ad monetization has gone global.

Google says early signals back the bet: click-through rates on sponsored product listings in AI Mode already match those of organic listings, Schindler said, and the company’s own research finds users consider the ads relevant. The push builds on Gemini-powered ad formats Google introduced in May, including conversational discovery ads that respond to user questions and sponsored recommendations woven into AI-generated answers.

CEO Sundar Pichai said Search queries grew faster year-over-year than at any point in the past five years, without disclosing the exact figure, and credited AI features with pushing people toward longer, more complex searches. On average, AI Mode queries are roughly three times the length of a traditional search, he said, and one in five AI Mode searches globally now involve voice, images, or documents; Google has also passed 50 billion visual searches a month.

Alphabet’s Google Services division, which includes Search, brought in $96.3 billion in revenue, up 11% year over year, while Google Cloud revenue jumped 103% to $30.7 billion.

Why it matters

The international rollout tests whether AI-generated answers can replace the ad dollars a slowing core Search business is losing, at a moment when investors are already punishing Alphabet for decelerating growth.