The key facts

  • Alphabet announced the rollout of ads in AI search mode to international markets — the first time outside the US
  • Quarterly revenue was $127.6 billion (+25%), but search ad growth slowed from 19% to 12% over three quarters
  • Alphabet shares fell 8% after the report

Global expansion of ads in AI search

Google has announced the rollout of ads in its AI search modes to international markets — the first time monetization of these formats extends beyond the United States. The announcement was made on October 28 during Alphabet's third-quarter earnings call, TechCrunch reports. As Google's chief business officer Philipp Schindler explained, the company is 'scaling quality ads in AI Overviews and AI Mode' to more users and queries, and is also launching multi-turn ads and ads in AI Mode in the US.

Slowing core business

The expansion comes against the backdrop of a slowdown in Google's key business. Search advertising revenue growth was 12% year over year in the third quarter — compared with 17% in the second and 19% in the first. Alphabet's total revenue nevertheless reached $127.6 billion (+25% year over year), but after the report was published the company's shares fell 8%. The slowdown increases pressure on Google to turn its emerging AI features into a meaningful source of advertising revenue.

Early results and user behavior

According to Schindler, early indicators are encouraging: click-through rates for sponsored shopping ads in AI Mode are already comparable to organic results, and user research shows the ads are perceived as relevant. Google CEO Sundar Pichai added that search queries are growing at their fastest pace in five years (he did not give an exact figure), and queries in AI Mode are on average three times longer than usual. One in five AI Mode searches worldwide now involves voice, images, or documents, and visual searches have exceeded 50 billion per month.

Context of the quarter

The expansion builds on Google's May announcement of new ad formats based on Gemini, including conversational ads and sponsored recommendations within AI-generated answers. It was a busy quarter for the company: the Gemini 4 Argonmodel was released, the Gemini app reached one billion monthly users, and the Pixel 11lineup launched. Financial results: Google Services, which includes Search, earned $96.3 billion (+11%), while Google Cloud brought in $30.7 billion, up 103%.