Google says AI investments boosting searches amid slower ad growth

Summarised from 4 outlets · Updated 28 Oct, 22:10 · Archive

Alphabet reported that AI investments are driving record year-over-year search growth, though core search advertising growth slowed to 12 per cent.

Alphabet reported third-quarter revenues of $127.6 billion, up 25 per cent year-over-year. CEO Sundar Pichai stated that the company's AI investments are driving overall search query growth, including commercial queries, with year-over-year query growth at its highest level in five years. Google Cloud revenue grew 103 per cent year-over-year to $30.7 billion.

Google Search revenue grew 12 per cent year-over-year in the quarter, representing a significant deceleration from 17 per cent growth in the second quarter and 19 per cent in the first quarter. The slowdown in core search advertising prompted Alphabet's share price to fall 8 per cent following the results.

To address the advertising slowdown, Google is expanding AI-powered search ads to international markets for the first time. Philipp Schindler, Google's chief business officer, said the company is 'scaling high-quality ads within AI overviews in AI mode to more users and queries'. Early results suggest click-through rates for sponsored product listings in AI Mode are comparable to those for organic listings, with user research indicating people find the ads relevant.

How it is being reported

• Investors turn on Google owner Alphabet after profit miss, ad slowdown and high spendingNet profit slid 25% from a year earlier to $26.2bn, well short of expectations, though revenue rose to $127.6bn Shares in Google parent Alphabet fell more than 10% in after-hours trading Wednesday, erasing tens of billions of dollars in stock market value from the $4tn tech giant. The company had reported lower-than-expected profit and a slowdown in its advertising business while it maintained big spending on AI. Net profit slid 25% from a year earlier to $26.2bn in the July-to-September period, or $2.12 a share, well short of expectations by analysts surveyed by FactSet. Continue reading...The Guardian · 28 Oct, 23:39
• Google parent Alphabet tumbles after profit disappoints, warns AI is battering its cash flowAlphabet's cash burn was driven by spending to boost cloud capacity and fund AI research.New York Post · 28 Oct, 22:52
• Google expands AI Search ads globally as core ad growth slowsThe announcement came alongside parent company Alphabet's third-quarter earnings report, which saw revenue grow 25% year over year to $127.6 billion.TechCrunch · 28 Oct, 21:48
• Google says its investments in AI are driving more searchesGoogle parent company Alphabet says that its AI investments are leading to a big growth in searches year-over-year, as noted in its Q3 2026 earnings today. "Our AI investments are driving overall Search query growth, including commercial queries," CEO Sundar Pichai says in a statement. "In fact, our year-over-year query growth rate is the highest […]The Verge · 28 Oct, 20:22

In this story: Google · Alphabet · Sundar Pichai · Philipp Schindler

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