What happened
Alphabet Chief Business Officer Philipp Schindler said AI Mode and AI Overviews drove a five-year high in query growth but weighed on quarterly results because they feature 'lower monetization' than traditional ad links, even as 'Google Search & other' rose 11% to $63.4 billion.
Why it matters
The company's own AI search features are pulling down the revenue per query that its ad-supported search links have long delivered, so the growth in usage is not translating into proportional ad money.
Summaries like this, every morning.
Google has built its business on search advertising since launching in 1998, and search remains the engine of Alphabet's growth. The most recent quarter shows that engine still running: 'Google Search & other' rose 11% to $63.4 billion, and total revenue climbed 24% to $127.6 billion. But the same quarter carried a warning from inside the company. Chief Business Officer Philipp Schindler said the rapid adoption of AI Mode and AI Overviews pushed overall query growth to a five-year high, yet those AI-generated queries feature 'lower monetization' than traditional ad-supported search links, and that weighed on results.
The tension is that Alphabet's own AI features are changing the economics of the queries they serve. More people are searching, but the AI answers attached to those searches bring in less ad money per query than the classic list of links. Thomas Monteiro, senior analyst at Investing.com, framed the open question as whether Google can charge for AI the way it once charged for search ads.
Legacy automakers sold electric vehicles without finding a replacement for the profitable gas-powered business underneath. Google's share of the search market worldwide outside China and Russia is 89%, a position built on habit and brand as much as results. Whether that franchise can be converted into an AI-era revenue model is the question the quarter leaves unresolved.
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