During Alphabet’s third-quarter earnings presentation, Google disclosed a worldwide extension of advertising within its AI-enhanced Search product. The move follows a reported total revenue of $127.6 billion, representing a 25 percent increase compared with the prior year. Executives highlighted the strategic aim of turning generative-AI capabilities into fresh monetisation channels as traditional search ad momentum eases.
Despite the overall revenue rise, the segment that powers Search advertising showed a clear deceleration. Year-over-year growth for Search ad revenue fell to 12 percent in the third quarter, down from 17 percent the previous quarter and 19 percent earlier in the year. The earnings release noted an 8 percent drop in Alphabet’s share price after the results were announced.
Initial performance data suggest the new formats are resonating with users. Click-through rates for sponsored product listings displayed in AI Mode are reported to be on par with those observed for organic results, according to a company spokesperson. Internal user studies also indicate that a majority of participants consider the ads to be relevant within the AI-generated answer context.
The rollout expands on a May unveiling of Gemini-driven advertising units. Those offerings include conversational discovery ads that answer user questions in a dialogue-like fashion, as well as sponsored recommendations embedded directly within AI-crafted answers. Both formats are designed to blend promotional content with the generative response, aiming to capture attention without disrupting the conversational flow.
CEO Sundar Pichai highlighted that the volume of Search queries rose at the fastest annual pace in half a decade, though the precise percentage was not disclosed. He attributed the surge to AI-enhanced features that encourage users to submit longer, more complex inputs. In AI Mode, queries are on average three times the length of conventional searches, and one in five incorporates voice, image, or document data. Google also reported exceeding fifty billion visual searches each month.
The broader Google Services segment posted $96.3 billion in revenue, an 11 percent rise year over year, while the Cloud division experienced a 103 percent jump to $30.7 billion. The quarter also saw the introduction of Gemini 4 Argon, the Gemini app reaching one billion monthly active users, and the launch of the Pixel 11 hardware line. These developments illustrate Alphabet’s effort to diversify income streams beyond traditional search advertising.