Google reported record search growth, but its search revenue missed estimates and shares fell about 10%. Ads in AI answers are the fix, so expect more of them.
Google is getting more searches than ever, but it is earning less from each one than investors hoped. In its third-quarter results on Wednesday, Google said Search revenue rose 12% from a year ago. That still missed Wall Street estimates, and the share price fell about 10% in after-hours trading.
Google opened its report by saying its year-over-year growth in queries, which means searches, was the highest in the last five years. The money did not keep pace. Search is the part of the business that sells ads alongside results, and it is Google's core moneymaker.
Philipp Schindler, Google's chief business officer, pointed to several factors. One was foreign-exchange headwinds, meaning currency swings that cut into revenue. Google expects them to affect Search again next quarter. He also said fast growth in AI Mode, Google's AI-powered search feature, played a role because ads there earn less. "The strong growth in AI Mode queries had an impact because of the lower monetization we were seeing in AI Mode," he said.
Schindler said ad experiments had shown "promising results." Google is now scaling ads in AI Mode and Overviews to more queries. CEO Sundar Pichai compared the moment to the shift to mobile more than a decade ago. "We are focused on building the best Search user experience, followed by monetization," he said.
Since ChatGPT took off in late 2022, investors have wondered whether AI could threaten Google's search business. Chatbots give people another way to search, and they pushed Google to change its own product. Investor Gene Munster noted that Search had been beating estimates since March of 2025. If this was a clean miss with no one-time factors, he wrote, it will likely restart fears that AI bots will nibble away at growth.
Bernstein Research analyst Mark Shmulik asked a related question: are more monetizable search queries being affected by AI surfaces and agents?
The way people search is changing, and ads inside AI answers will likely become more common as Google tries to earn more from them. It is not yet clear how many more ads will appear or how quickly they will pay off.
Investors now want proof that Google's efforts to earn more from AI search are working, and that Search can stay as strong in the AI era as it has been. Currency effects are also expected to weigh on Search next quarter.
Expect more ads inside Google's AI answers, because those searches are growing fast but earn Google less than regular ones.
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