Alphabet’s Google Search & Other line still grew in Q3 2026, but the pace is cooling. Revenue reached $63.35 billion, up 12% year over year, down from 17% in Q2 and 19% in Q1. Compared with the prior quarter’s $63.27 billion, Search revenue was nearly flat.
What pulled the brakes
On the earnings call, Chief Business Officer Philipp Schindler said currency movements were the biggest factor in the quarter-over-quarter slowdown. Retail also contributed as some Asia-Pacific advertisers adjusted to the EU’s removal of the de minimis exemption for low-value imports, and media and entertainment spending normalized after a Q2 that included the FIFA World Cup.
CFO Anat Ashkenazi added that Google faced a tougher comparison because Search growth accelerated through the second half of 2025. She expects a slightly larger currency headwind in Q4, mainly in Search and YouTube ads.
AI Mode’s monetization gap
Google says Search query growth is the highest it has been in five years, including commercial queries. Yet Schindler confirmed that strong AI Mode query growth weighed on Search revenue because AI Mode currently monetizes at a lower level. He did not disclose what it was lower than or how much revenue was affected.
CEO Sundar Pichai put the shift in historical context, saying, “Just like our shift to mobile over a decade ago, we are focused on building the best Search user experience, followed by monetization.”
Ads in AI Mode scale up
Google is taking the monetization gap head-on. Ads in AI Mode are expanding to ten additional markets:
- Australia
- Canada
- India
- Kenya
- Malaysia
- New Zealand
- Nigeria
- Pakistan
- The Philippines
- Singapore
In the United States, Google is launching ads in AI Mode follow-on questions. All existing Search, Shopping and Performance Max campaigns are eligible by default and cannot opt out individually.
What performance marketers need to know
AI Mode reach depends heavily on match types. Exact match and phrase match can serve on queries with direct commercial intent, but they do not qualify for contextual matching on exploratory questions. AI Max for Search, broad match, Shopping campaigns and Performance Max qualify for both direct and broader AI Mode queries.
Google also confirms that AI explainers may appear in AI placements, with short text generated by Gemini from the query, the AI response and public sources, including an advertiser’s website. Advertisers cannot create, edit, approve or opt out of this text. Negative keywords and brand exclusions still apply, and results land in standard aggregate reporting, not a separate AI Mode report.
Turn the shift into a playbook
For now, treat AI Mode as upper-funnel inventory. Schindler said many new questions in AI-powered Search are upper-funnel and that most AI Mode queries are incremental, which Google expects to create more monetization opportunities over time. Use broad match or Performance Max if you want to capture that demand, layer negatives for control, and watch combined reporting carefully.
Google plans to expand ads in AI Mode to Brazil, Mexico and the United Kingdom in Q4 2026.
Source: Search Engine Journal
