Alphabet Reports $113.8B in Q4 Revenue as Google Details AI Mode Ad Plans
Alphabet reported $113.8 billion in Q4 2025 revenue, beating Wall Street expectations and pushing the company’s annual revenue past $400 billion for the first time.
Meanwhile, Google Search revenue rose 17% year-over-year to $63.07 billion, reflecting strong growth as AI features reshape how people search.
During the earnings call, the company outlined how it plans to monetize AI Mode and shared new insights into how AI is influencing search behavior.
What’s Happening
Google Search and other advertising revenue reached $63.07 billion in Q4, up from $54.03 billion in Q4 2024.
Search growth accelerated throughout 2025:
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Q1: 10% growth
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Q2: 12% growth
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Q3: 15% growth
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Q4: 17% growth
CEO Sundar Pichai said Search usage reached record levels in Q4, driven largely by new AI-powered features.
He explained:
“Once people start using these new experiences, they use them more. In the US, we saw daily AI Mode queries per user double since launch.”
According to Google, AI Mode searches are three times longer than traditional queries, and a large share of them lead to follow-up questions.
AI Mode Monetization Tests
Chief Business Officer Philipp Schindler confirmed that Google has begun testing monetization strategies for AI Mode.
These include:
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Ads placed below AI-generated responses
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Expanded advertising formats for complex queries
Schindler said:
“We’re in the early stages of experimenting with AI Mode monetization, like testing ads below the AI response, with more underway.”
Google also announced Direct Offers, a new advertising pilot.
This feature will allow advertisers to display exclusive deals directly within AI Mode when users appear ready to purchase.
Schindler added:
“Direct Offers will allow advertisers to show exclusive offers for shoppers who are ready to buy, directly in AI Mode.”
Google is also planning to enable checkout directly within AI Mode for select merchants.
Longer AI queries are also creating new advertising opportunities. According to Schindler, the improved intent understanding from Gemini allows Google to show ads for complex searches that were previously difficult to monetize.
YouTube Revenue Miss
Ad revenue for YouTube reached $11.38 billion, up 9% year-over-year, but fell short of analysts’ expectations of $11.84 billion.
Schindler attributed the shortfall to a tough comparison with Q4 2024 election advertising.
“On the brand side, the largest factor negatively impacting the year-over-year growth rate was lapping the strong spend on U.S. elections.”
He also noted that growth in YouTube Premium subscriptions can reduce ad revenue, as subscribers see fewer ads.
Other Key Developments
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Google Cloud revenue surged 48% to $17.66 billion
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Alphabet plans to spend $175–$185 billion on capital expenditures in 2026
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That investment is nearly double the company’s 2025 spending
Much of that investment is expected to support AI infrastructure and new AI-powered features across Google’s products.
Why This Matters
A year earlier, in Q4 2024, Google Search revenue grew 12%.
By Q1 2025, AI Overviews had already reached 1.5 billion monthly users, while Search growth stood at 10%.
Now, growth has accelerated to 17%, suggesting that AI features may be expanding search activity.
However, many of the metrics highlighted during the earnings call focus on users staying longer within Google’s ecosystem.
Schindler described new AI-driven ad opportunities as reaching queries that were:
“previously challenging to monetize.”
That represents a clear monetization win for Google, but it raises an important question for publishers and marketers: what happens to referral traffic?
When asked about possible cannibalization, Pichai said Google hasn’t seen evidence of it.
“The combination of all of that creates an expansionary moment. I think it’s expanding the type of queries people do with Google overall.”
While search activity may be expanding, the real impact on referral traffic will depend on your own analytics.
Looking Ahead
Google continues to argue that AI features expand search rather than replace it, and the strong Q4 numbers appear to support that view.
The bigger unknown is how AI Mode will affect traffic sent to external websites.
As AI-powered search evolves, monitoring referral traffic and user behavior in your analytics will become increasingly important.