Google Q3 Earnings: AI Features Drive Search Growth and Record Revenue
Google’s Q3 2025 earnings highlight record revenue and rising search usage driven by AI Mode and AI Overviews. CEO Sundar Pichai says AI is expanding search engagement, not replacing it, as Alphabet invests heavily in Gemini and AI-powered search infrastructure.
Alphabet Inc. reported its first-ever $100 billion quarter, emphasizing that artificial intelligence (AI) is boosting—rather than cannibalizing—Google Search usage. The company framed AI Mode and AI Overviews as catalysts for increased engagement and commercial activity within its flagship product.
AI Mode and AI Overviews Expand Search Usage
During Alphabet’s third-quarter 2025 earnings call, CEO Sundar Pichai described the period as “an expansionary moment for Search,” asserting that Google’s AI-driven features “highlight the web” and continue to send “billions of clicks to sites every day.”
Pichai reported that both total and commercial search queries grew year over year, with the growth rate accelerating in Q3 compared to Q2. He attributed the momentum to AI Mode and AI Overviews—key components of Google’s evolving search experience.
According to Pichai, AI Mode saw “strong and consistent” week-over-week growth in the U.S., with query volumes doubling over the quarter. The feature has since expanded globally, supporting more than 40 languages and reaching over 75 million daily active users. Pichai added that Google shipped more than 100 improvements to AI Mode in Q3 and credited the product with driving “incremental total query growth for Search.”
AI Overviews, which summarize results using generative models, also contributed to engagement gains. Pichai noted that their impact was “even stronger” in the third quarter, particularly among younger users who are more likely to engage with AI-driven search results.
Financial Performance: Alphabet Surpasses $100 Billion in Quarterly Revenue
Alphabet reported total revenue of $102.3 billion, up from $76.7 billion a year earlier. “Google Search & other” revenue climbed to $56.6 billion, an increase from $49.4 billion year over year.
YouTube ad revenue reached $10.26 billion, reflecting continued dominance in the streaming space. Citing Nielsen data, Pichai said YouTube has held the top spot for U.S. streaming watch time for more than two years. He also noted that Shorts—YouTube’s short-form video platform—now generates more revenue per watch hour than traditional in-stream ads.
Alphabet’s operating margin stood at 33.9% excluding a $3.5 billion fine from the European Commission, which weighed on reported margins for the quarter.
Strategic Context: AI as an Expansion Strategy
Google’s messaging to investors centered on a clear narrative: AI tools are expanding the search ecosystem rather than eroding it. The company’s data suggests that AI-powered experiences are prompting more searches, clicks, and ad interactions.
If sustained, this dynamic could support a broader rollout of AI Mode and AI Overviews across more regions and query types. For advertisers, the shift signals that Google’s search distribution is evolving, not contracting—potentially reshaping how paid placements appear within AI-enhanced results.
However, some data points remain undisclosed. Google did not provide details on outbound click share from AI-generated results or announce new analytics tools to measure AI-driven traffic. As adoption grows, marketers may need to rely on independent analytics to assess performance.
Investment Outlook and Future Plans
Alphabet raised its 2025 capital expenditures guidance to $91–$93 billion, reflecting intensified investment in AI infrastructure and data centers. Pichai said the company remains focused on scaling AI across its products, including plans for “a browser powered by AI” with deeper Gemini integrations in Chrome.
Looking ahead, Pichai highlighted the upcoming release of Gemini 3, expected later this year, which will further strengthen AI Mode and AI Overviews with enhanced model capabilities. The company characterized the transition as part of its long-term vision for a more intelligent, adaptive search platform built around generative AI.
Analysis
Google’s Q3 results underscore a pivotal transition: the integration of generative AI into core search is not diminishing traditional usage but stimulating it. The company’s performance and guidance suggest confidence in AI as both a technological and commercial growth driver, positioning Google to maintain dominance in an increasingly AI-led search landscape.
