Alphabet’s (GOOGL) Google Search & Other row had a 12% addition in year-over-year income in Q3 2026 to $63.35 billion. Search income growth has been slowing downward for two quarters now, following being at 19% in Q1 and 17% in Q2; and Search income was basically flat compared to final quarter’s $63.27 billion.
On Alphabet’s earnings call, Chief Business Officer Philipp Schindler mentioned that lesser monetization inside AI Mode was one of three reasons for the slower growth.
In supplement to announcing expanded preparedness of ads in AI Mode in ten additional markets, Alphabet additionally stated that it is launching ads in AI Mode follow-on inquiry functionality in the United States. All existing Search, Shopping, and Performance Max campaigns are eligible by default and cannot opt out separately.
Why Search Growth Slowed
The biggest aspect driving the hunt dilatory downward compared to Q2 was, according to Schindler, prosperity movements. Retail additionally informed an impact, he said, alongside certain Asia-Pacific advertisers affected by the E.U. eliminating its de minimis exemption for low-value imports. Media and amusement saw spending normalize following a powerful Q2 which included the FIFA World Cup.
Google CFO Anat Ashkenazi stated that prosperity movement was a small headwind to the twelvemonth complete twelvemonth growth and a larger headwind to the fourth complete fourth growth. Ashkenazi additionally mentioned that there was a tougher difference since the hunt growth continued to accelerate throughout the second fractional of 2025.
On the Q2 earnings gathering call in July, Ashkenazi had signaled the two items stating that Google expected a minor FX headwind in Q3 chiefly in Search & YouTube ads. Additionally, she stated that hunt would commencement lapping final year’s acceleration in Q3.
In my prior report I noted in July that Q2 was the archetypal period we had seen a dilatory downward in hunt growth following 4 quarters of accelerating growth. The matter at hand afterward was if it was a impermanent dilatory downward or if it represented the commencement of a duration of slowing growth.
What Google Said About AI Mode Monetization
CEO Sundar Pichai stated during the earnings notice that AI funding has driven Search query growth (including business queries) as fine as the “year-over-year query growth charge is the highest it’s been in the final five years.”
During the call alongside investors, J.P. Morgan expert Doug Anmuth questioned the difference in twelvemonth complete twelvemonth query growth and Search ad income growth. Schindler noted it was currency, retailing and media archetypal and afterward stated that powerful AI manner query growth negatively affected hunt income growth because of lesser monetization in AI Mode. He did not province what AI mode’s monetization was lesser than, nor the amount of prosperity this affected hunt ad revenue.
Pichai told analysts:
“Just akin our change to mobile complete a decade ago, we are focused on construction the finest Search person experience, followed by monetization.”
In his prepared remarks, Schindler stated many of the new questions group ask in AI-powered Search are upper-funnel, and that the bulk of AI Mode queries are incremental, which he stated creates additional monetization opportunities complete time.
In Google’s notice post, Shashi Thakur, VP and GM of Google Search Ads and Ads on Google Experiences, wrote:
“Our investigation shows that group are comfortable alongside ads in AI Mode and discover them extremely relevant. In fact, click-through rates are already akin between sponsored and integrated merchandise catalog items inside AI Mode.”
A footnote references a origin of Google’s click through comparison, which is inner data for Google in the United States for the period duration August 20th thru September 3rd of 2026.
At the Google Marketing Live event in May of 2025, Thakur stated to reporters, including me, that AI Overviews create income “at the identical rate” as those exact searches whenever there are no overviews. This assertion covered AI Overviews, but does not contain data on AI mode.
Ads In AI Mode Expand To 10 Countries
Google is scaling ads in AI Mode in Australia, Canada, India, Kenya, Malaysia, New Zealand, Nigeria, Pakistan, the Philippines, and Singapore.
Highlighted markets are those named in the Oct. 28 announcement. Unmarked countries are not an preparedness statement. *Q4 examples are not an exhaustive list.
Americas
Europe & Africa
Asia-Pacific
Source: Google Ads & Commerce · Oct. 28, 2026Illustration: SEJ · Country outlines: Natural Earth
The article additionally says Google is launching multiturn ads in the U.S., which authorize ads in follow-up queries in AI Mode.
Google’s assistance leaf on ads in AI-powered Search experiences states that advertisers cannot immediately mark AI Overviews or AI Mode individually, nevertheless negative keywords & brand exclusions volition continue to apply.
When a query has straightforward business intent, exact equivalent and expression equivalent keywords can serve; however, these types of keywords do not meet requirements for contextual matching on broader, exploratory-type questions. AI Max for Search, broad match, Shopping campaigns and Performance Max all meet requirements for both.
Placements that have AI explainers transport abbreviated content generated by Gemini from the person query, the AI reply and community sources (including the advertiser’s website). The advertiser has no capability to create, edit, endorse or opt out of this content. Google announced AI explainers at Google Marketing Live in May.
Results are included in norm reporting as part of total reporting for campaigns and hunt conditions reports. The assistance leaf lists English as the tongue for ads inside AI Overviews and AI Mode and additionally indicates lone content ads volition be accessible in Pakistan.
Why This Matters
Google tied the two its highest query growth charge in five years and part of its income slowdown to AI.
How much AI Mode inventory a run can attain depends on whether it uses AI-powered targeting specified as broad equivalent or AI Max, and norm reports merge AI Mode results alongside the remainder of Search.
In Q2, Pichai stated Google was sending “billions of clicks to websites all week” through AI features in Search. His published Q3 remarks and the call didn’t contain a clicks figure, so the fourth adds item on how Google makes prosperity from AI Mode but none on traffic to websites.
Looking Ahead
CFO Anat Ashkenazi stated that in Q4, at current place rates, Google expects a slightly larger prosperity headwind, mostly in Search and YouTube ads, and that continuing to lap final year’s Search acceleration volition force growth.
Google plans to develop ads in AI Mode to additional locales in Q4 2026, including Brazil, Mexico, and the U.K.
Featured Image: PixieMe/Shutterstock
