Google’s search revenue Ferrari hits an AI-powered speed bump
Alphabet’s third-quarter results showed Google Search advertising revenue growth slowing to 12 per cent year on year, down from 17 per cent in the previous quarter. The article says lower advertising returns from AI Overviews and AI Mode are among the factors, raising questions about whether Google can earn as much from AI-assisted searches as from traditional results.
Google said it would expand ads in AI Overviews and introduce multi-turn ads for AI Mode queries in the US. Search query growth was reportedly the strongest in five years, suggesting people are still using Google, while one advertiser complained of higher costs for lower-quality clicks. Analysts say AI could bring more people to information search, but Google has not disclosed enough detail to show how well it can monetise the shift.
In short
- Search revenue growth slowed to 12 per cent in Q3.
- Google plans to expand ads in its AI search features.
- Search use is growing, but AI monetisation remains uncertain.
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The strongest fair case each way — we don't pick a winner.
The case for
Google’s AI search features could keep the service useful as people’s search habits change, and the reported five-year high in query growth suggests demand remains strong. Expanding ads in AI Overviews and adding multi-turn ads may help Google earn revenue from these new formats over time, while AI could also bring more people to information search.
The case against
The slowdown in Search advertising growth, alongside reports of lower returns from AI Overviews and concerns about costly, lower-quality clicks, raises a reasonable doubt about whether AI searches can match traditional results’ commercial value. Without more detail on performance, Google’s plans to expand advertising in AI features do not yet show that the shift can protect revenue or advertisers’ returns.
Explained simply
Google makes much of its money by showing adverts alongside search results. Advertisers pay to reach people looking for information, products or services, and Google earns more when those adverts attract valuable clicks.
The company is adding AI features that summarise information or let people ask follow-up questions. These change how search results are presented, which may affect where adverts appear and how often users click them.
Alphabet is Google’s parent company, and its results are watched closely by advertisers and investors because search advertising is a major source of its income. The shift matters because Google needs to make AI useful to searchers while keeping it commercially valuable to advertisers.