Google Search revenue growth slows, Alphabet points to AI Mode

Google Search is earning at a slower pace, and the company partly links this to AI answers. Even so, it is expanding ads in AI Mode to more markets and new formats.

Alphabet published its third-quarter results on October 28, 2026. The Google Search & Other segment brought in $63.35 billion, 12 percent more than a year earlier. Growth was 19 percent in the first quarter and 17 percent in the second quarter. Compared with the second quarter ($63.27 billion), revenue was practically unchanged. According to Stocktwits, analysts had expected 15 percent growth, and Alphabet shares fell by about 10 percent after the session.

Philipp Schindler, Google's chief business officer, listed three main reasons during the investor conference call: exchange rates, weaker spending by some advertisers from Asia-Pacific after the EU removed the de minimis exemption for cheap shipments, and media spending returning to normal after the FIFA World Cup in the second quarter. He added that the rapid growth in queries in AI Mode (the search mode with AI-generated answers) reduced revenue growth momentum because those queries generate less from ads. He did not say what amount was involved. CEO Sundar Pichai said that query growth is at its highest level in five years. He also compared the current situation to the shift to mobile devices: first the user experience, then monetization.

On the same day, Google expanded ads in AI Mode to ten markets, including Canada, Australia, India, and Singapore. More are to join in the fourth quarter, including Brazil, Mexico, and the United Kingdom. Poland is not on the list. In the US, ads in follow-up questions in AI Mode are launching. All Search, Shopping, and Performance Max campaigns are eligible for them by default, and it is not possible to opt out of this format separately. As reported by Search Engine Journal (opens in a new tab), an advertiser cannot target ads exclusively to AI Mode, and the results go into aggregated campaign reports. Negative keywords and brand exclusions still apply.

Chief Financial Officer Anat Ashkenazi says that in the fourth quarter the impact of exchange rates on results will be slightly greater. For companies buying ads on Google, it is important that reach in AI Mode depends on whether the campaign uses broad match or AI Max (a feature in which AI itself matches queries to ads), and the performance of this format cannot be separated out in reports.