Google Expands AI Search Ads Globally as Core Ad Growth Slows

Google is expanding advertising within its AI-powered Search experiences to international markets, seeking new revenue as growth in its traditional search ad business slows. The move was announced during Alphabet’s third-quarter earnings call, after the company reported revenue of $127.6 billion, up 25% year over year. Despite the overall growth, Alphabet shares fell 8% following the results as search advertising growth continued to decelerate. Google Search revenue rose 12% year over year in the quarter, down from 17% in the second quarter and 19% in the first. That trend has increased pressure on the company to convert expanding AI features into meaningful ad revenue. Google chief business officer Philipp Schindler said the company is scaling high-quality ads within AI Overviews and AI Mode to more users and queries, and is extending monetization internationally for the first time. The expansion will roll out alongside multi-turn ads and AI Mode in the U.S. Google said early performance indicators are encouraging. Click-through rates for sponsored product listings in AI Mode are already comparable to organic listings, and user research suggests consumers find the ads relevant. The expansion builds on May’s announcement of Gemini-powered ad formats, including conversational discovery ads that respond to user questions and sponsored recommendations embedded in AI-generated answers. Google also highlighted growing engagement with its AI features. CEO Sundar Pichai said search queries grew at their fastest year-over-year rate in five years, crediting AI tools with encouraging longer, more personalized and multimodal searches. He said queries in AI Mode are three times longer on average than traditional searches, and one in five AI Mode searches globally involves voice, images or documents. Google has surpassed 50 billion visual searches per month. The broader Alphabet results showed the Google Services division, which includes Search, generating $96.3 billion in revenue, up 11% year over year. Google Cloud revenue surged 103% to $30.7 billion. The quarter also featured the release of Gemini 4 Argon, the Gemini app reaching one billion monthly users and the launch of the Pixel 11 lineup, reinforcing Google’s push to pair AI-driven products with new advertising and cloud growth opportunities.