Google Expands AI Ads Globally After Alphabet Revenue Miss
Google is scaling advertisements in its AI Mode to 10 international markets to offset slowing search revenue and a third-quarter earnings miss by Alphabet Inc.
Alphabet Inc. reported third-quarter revenue of approximately $127.6 billion, missing analyst expectations and triggering a nearly 10% drop in after-hours share prices. The decline was compounded by an $8.2 billion unrealized loss on an investment in SpaceX. While Google Search queries grew at their fastest pace in five years, revenue growth for the segment slowed to 12% from 17% in the second quarter.
To address this slowdown, Google is expanding advertisements within its AI Mode to 10 international markets, including India, Canada, and Australia, with plans to add the UK, Brazil, and Mexico later this quarter. Chief Business Officer Philipp Schindler attributed the revenue dip to foreign exchange headwinds, EU retail advertising challenges, and lower monetization within AI-powered experiences. The company is now scaling high-quality ads in AI overviews and testing multi-turn ads in the United States to monetize conversational, follow-up queries.
CEO Sundar Pichai stated that AI investments are driving growth in commercial queries and changing user behavior toward more personalized, multimodal searches. Google is also developing a strategy for agentic shopping to ensure AI agents do not make traditional search ads obsolete. By automating the grunt work of shopping while preserving the discovery experience, Google aims to maintain its core revenue model. Additionally, Pichai announced the rollout of Carbon, a new internal AI model designed to increase corporate productivity.
