Google expands AI Search ads globally as core ad growth slows

Google said Wednesday it will bring ads in its AI-powered Search experiences to international markets, a bet that generative AI can open new revenue streams as growth in its core search advertising business slows. The announcement came during parent company Alphabet's third-quarter earnings call, where the company reported $127.6 billion in revenue, up 25% year over year. Still, Alphabet shares fell 8% following the results as investors focused on the decelerating search ad business.

Search advertising growth has now slowed for three consecutive quarters: Google Search revenue grew 12% year over year in the third quarter, down from 17% in the second quarter and 19% in the first. That deceleration adds pressure to turn Google's expanding AI features into a meaningful source of advertising revenue. "We are now scaling high-quality ads within AI overviews in AI mode to more users and queries," Chief Business Officer Philipp Schindler told investors. "This includes taking our monetization footprint global for the first time." Schindler said the company is expanding ads in AI mode into international markets alongside multi-turn ads and AI mode in the U.S.

On the usage side, CEO Sundar Pichai told investors that Search queries grew at their fastest year-over-year rate in five years, though he did not disclose the exact figure, crediting AI features with prompting longer and more complex searches. Queries in AI Mode are three times longer on average than traditional searches, Pichai said, and one in five AI Mode searches globally involves voice, images, or documents. Google has also surpassed 50 billion visual searches per month. "People are using our AI features more, searching in entirely new ways," Pichai said. "Their queries are longer, personalized, and multimodal."

The broader business numbers were more mixed in composition: Google Services, which includes Search, generated $96.3 billion in revenue, up 11% year over year, while Google Cloud revenue surged 103% to $30.7 billion. The results cap a busy quarter for Google that included the release of Gemini 4 Argon, the Gemini app growing to one billion monthly users, and the launch of its Pixel 11 lineup.

What remains to be seen is whether AI Search ads can actually offset the core search slowdown. Key open questions: how fast the international rollout reaches material scale, whether longer multi-turn AI queries convert as well as traditional search ads, and whether the Q3 deceleration reflects a temporary transition or a structural shift in how users interact with Search.

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