Google Takes AI Search Ads Global as Core Ad Growth Slows to 12%

Alphabet reported $127.6 billion in third-quarter revenue, up 25% year over year, but its shares fell 8% as Google Search advertising growth slowed for the third straight quarter. The company's answer, announced Wednesday on its earnings call: take ads inside AI-powered Search international for the first time.

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 puts pressure on Google to turn its expanding AI features into a meaningful advertising revenue stream — and executives moved quickly to show they're doing exactly that.

What did Google announce?

Philipp Schindler, Google's chief business officer, told investors the company is scaling its AI ad formats well beyond the U.S. market. "We are now scaling high-quality ads within AI overviews in AI mode to more users and queries," Schindler said. "This includes taking our monetization footprint global for the first time. Today, we're announcing the expansion of ads in AI mode into international markets alongside multi-turn ads and AI mode in the U.S."

The expansion builds on Google's May announcement of new Gemini-powered ad formats. Those include conversational discovery ads that respond to users' questions and sponsored recommendations embedded directly into AI-generated answers.

Early numbers look promising, according to the company. Schindler said click-through rates for sponsored product listings in AI Mode are already comparable to those for organic listings. Google's user research also indicates people find the ads relevant — a key signal for advertisers weighing whether AI search formats deserve budget.

How is AI changing Search behavior?

CEO Sundar Pichai said Search queries grew at their fastest year-over-year rate in five years, though he didn't disclose the exact figure. He credited AI features with reshaping how people search, including pushing them toward longer and more complex queries.

The behavioral shift is measurable. Queries in AI Mode run three times longer on average than traditional searches, Pichai said. One in five AI Mode searches globally now involves voice, images, or documents. Google has also surpassed 50 billion visual searches per month.

"[Search] is bringing the benefits of AI to more people than any other product in the world," Pichai told investors. "People are using our AI features more, searching in entirely new ways. Their queries are longer, personalized, and multimodal."

For advertisers, that shift matters. Longer, multi-turn, multimodal queries create new placement opportunities that traditional blue-link ads can't serve — which is precisely the inventory Google is now monetizing globally.

Where does Alphabet's money come from?

Alphabet's Google Services division, which includes Search, generated $96.3 billion in revenue, up 11% year over year. Google Cloud was the standout: revenue surged 103% to $30.7 billion, making it one of the fastest-growing pieces of the Alphabet portfolio.

The quarter was busy beyond ads and cloud. Google released Gemini 4 Argon, grew the Gemini app to one billion monthly users, and launched its Pixel 11 smartphone lineup.

What's at stake?

The stock's 8% drop signals investor anxiety over the Search ad deceleration. The bet is that AI Mode ads — now going global, with click-through rates already matching organic listings — can replace and eventually exceed the revenue growth that classic Search advertising is losing. The coming quarters will show whether international AI ad formats scale fast enough to close that gap.