Google is expanding advertising within its AI-driven Search features to international markets, wagering that generative AI can unlock fresh revenue streams even as growth in its core search advertising business decelerates. The company made the announcement on Wednesday during Alphabet's third-quarter earnings call, where it reported $127.6 billion in revenue, marking a 25% increase year over year. However, Search advertising growth continued to lose momentum, and Alphabet shares dropped 8% following the results. Google Search revenue rose 12% year over year in the third quarter, a decline from 17% growth in the second quarter and 19% in the first quarter. This slowdown intensifies pressure on Google to transform its expanding AI capabilities into a substantial advertising revenue source.

"We are now scaling high-quality ads within AI overviews in AI mode to more users and queries," Philipp Schindler, Google's chief business officer, stated during the investor call. "This includes taking our monetization footprint global for the first time. Today, we're announcing the expansion of ads in AI mode into international markets alongside multi-turn ads and AI mode in the U.S."

Google reports that early indicators suggest these formats are effective. According to Schindler, click-through rates for sponsored product listings in AI Mode are already on par with those for organic listings. The company's user research also shows that people consider the ads relevant. This initiative extends Google's May announcement of new Gemini-powered ad formats, which included conversational discovery ads that respond to user questions and sponsored recommendations embedded within AI-generated answers.

Google CEO Sundar Pichai also noted that Search queries grew at their fastest year-over-year rate in five years, though he refrained from disclosing the specific growth figure. He attributed this to AI features reshaping how people interact with Search, including encouraging longer and more intricate queries. Queries in AI Mode average three times the length of traditional searches, Pichai explained, while one in five AI Mode searches globally incorporates voice, images, or documents. Google has also exceeded 50 billion visual searches per month.

"[Search] is bringing the benefits of AI to more people than any other product in the world," Pichai told investors. "People are using our AI features more, searching in entirely new ways. Their queries are longer, personalized, and multimodal."

Alphabet's Google Services division, which encompasses Search, generated $96.3 billion in revenue, up 11% year over year. Google Cloud revenue soared 103% to $30.7 billion. These results cap a eventful quarter for Google, which included the release of Gemini 4 Argon, the Gemini app reaching one billion monthly users, and the debut of its Pixel 11 lineup.