Google Search Growth Slows to 12% amid AI Mode Revenue Pressure

Alphabet (GOOGL)’s Google Search & Other revenue rose 12% year over year to $63.35 billion in Q3 2026, while remaining essentially flat from $63.27 billion in Q2. The slowdown extended a two-quarter deceleration: growth ran at 19% in Q1 and 17% in Q2 before easing to 12%.

Q2 2026 marked the first slowdown after four quarters of accelerating Search growth. Q3 extends that deceleration, but two quarters of moderating growth do not resolve the earlier question of whether the pause was temporary or the start of a longer slowdown.

What slowed Google Search revenue?

On Alphabet’s earnings call, Chief Business Officer Philipp Schindler cited lower monetization within AI Mode—Google’s AI-powered Search experience—as a factor in slower growth. In his explanation, he placed currency, retail and media first, then said strong AI Mode query growth reduced revenue growth because monetization in AI Mode was lower.

Schindler called currency movements the biggest factor in the sequential slowdown. CFO Anat Ashkenazi said currency created a small headwind to year-over-year growth but a larger one to quarter-over-quarter growth. The comparison also became harder because Search growth accelerated throughout the second half of 2025.

Certain Asia-Pacific advertisers faced retail pressure after the European Union eliminated its de minimis exemption (the threshold for low-value imports). Media and entertainment spending normalized after a strong Q2 that included the FIFA World Cup.

In July, Ashkenazi had already told investors to expect a slight currency headwind in Q3, primarily in Search and YouTube ads. She also said Search would begin lapping the prior year’s acceleration.

How can AI lift queries but slow revenue?

CEO Sundar Pichai said AI investment had driven Search query growth, including commercial queries, and that the year-over-year query growth rate was the highest in five years. The metric measures Search activity, not revenue.

During the investor call, J.P. Morgan analyst Doug Anmuth asked why query growth and Search ad revenue growth were moving differently. Schindler said strong AI Mode queries negatively affected revenue growth because of lower monetization. He did not say what AI Mode’s monetization was lower than, nor quantify the revenue effect.

Pichai framed the sequence this way: “Just like our shift to mobile over a decade ago, we are focused on building the best Search user experience, followed by monetization.”

In prepared remarks, Schindler said many new questions in AI-powered Search are upper-funnel (early research-stage), while most AI Mode queries are incremental (additional). He said those queries create more monetization opportunities over time.

Where can advertisers use AI Mode ads?

Google confirmed that ads in AI Mode are expanding to 10 additional markets: Australia, Canada, India, Kenya, Malaysia, New Zealand, Nigeria, Pakistan, the Philippines and Singapore. The company is also launching multiturn ads—ads that appear in follow-up questions—in the United States.

All existing Search, Shopping and Performance Max campaigns qualify for AI Mode ads by default and cannot opt out of them separately. Google confirmed this rollout, but its performance figures remain company-reported rather than independent measurements.

Targeting follows several rules:

• Advertisers cannot directly target AI Overviews (AI-generated summaries in standard Search results) or AI Mode individually. Negative keywords and brand exclusions still apply.
• Exact-match and phrase-match keywords can serve queries with direct commercial intent, but they cannot qualify for contextual matching on broader, exploratory questions.
• AI Max for Search (an AI-powered targeting option), broad match, Shopping campaigns and Performance Max qualify for both direct-commercial and contextual AI Mode placements.

Placements with AI explainers carry short text generated by Gemini from the user’s query, the AI response and public sources, including the advertiser’s website. Google announced these explainers at Google Marketing Live in May. Advertisers cannot create, edit, approve or opt out of that generated text.

AI Mode results appear in standard campaign reporting and search-terms reports as aggregate data, alongside the rest of Search. Google lists English as the available language for ads in AI Overviews and AI Mode, with text ads as the only format in Pakistan.

What do the click and revenue claims show?

Google’s product rollout and campaign rules are confirmed in its announcement. The supporting performance claims are internal or executive statements. Shashi Thakur, VP and GM of Google Search Ads and Ads on Google Experiences, said: “Our research shows that people are comfortable with ads in AI Mode and find them highly relevant.”

Thakur also said click-through rates (CTR) are already similar between sponsored and organic product-list items in AI Mode. Google’s footnote identifies the comparison as internal US data collected from August 20 through September 3, 2026. No independent click-data benchmark or external tool estimate accompanied the disclosure.

At Google Marketing Live in May 2025, Thakur told reporters that AI Overviews generated revenue at the same rate as the same exact searches when no overview appeared. That statement covered AI Overviews, not AI Mode, and the Q3 announcement did not supply an equivalent AI Mode revenue rate.

For website traffic, Pichai said in Q2 that Google was sending billions of clicks to websites every week through AI features in Search. Alphabet’s published Q3 remarks and earnings call did not include another clicks figure, so the latest quarter adds monetization details but no new traffic measurement.

What should advertisers watch in Q4?

At current spot rates, Ashkenazi said Google expects a slightly larger currency headwind in Q4, mostly affecting Search and YouTube ads. Continuing to lap the prior year’s Search acceleration will also pressure growth.

Google plans to expand AI Mode ads to more locales in Q4 2026, including Brazil, Mexico and the UK. What does this change for advertisers? How much AI Mode inventory a campaign can reach depends on whether it uses AI-powered targeting such as broad match or AI Max. Google’s combined reporting also makes AI Mode results part of the wider Search mix.

Q4’s expansion into Brazil, Mexico and the UK will show whether broader AI Mode ad inventory can offset a slightly larger currency headwind and tougher prior-year comparisons.