Alphabet reported the fastest growth in search queries in five years during the third quarter, while google search revenue grew at its slowest rate of the year. According to Search Engine Journal, search and other revenue reached $63.35 billion, falling roughly $1.6 billion below analyst expectations as lower monetization in AI Mode impacted earnings.
Key takeaways
- Alphabet reported its fastest search query growth in five years alongside a slower rate of revenue growth.
- Search revenue reached $63.35 billion in the third quarter, missing analyst estimates by about $1.6 billion.
- Google executive Philipp Schindler stated that strong growth in AI Mode queries impacted earnings due to lower monetization.
- Alphabet shares fell about 13% on Thursday following the earnings report.
How did google search revenue miss analyst expectations?
Search and other revenue grew 12% in the third quarter, dropping from 19% in the first quarter and 17% in the second quarter. CNBC reported that this marked the second straight quarter where search came in under estimates. Alphabet shares suffered a severe reaction, falling about 13% on Thursday in the steepest one-day drop on record, which erased roughly half a trillion dollars in market value. Alongside search, free cash flow hit negative $9.07 billion against an expected shortfall of about $2.7 billion while capital spending continued to climb.
What factors affected the alphabet earnings release?
Chief business officer Philipp Schindler listed four specific drivers behind the deceleration in search revenue from the second quarter to the third. Foreign exchange led the list as the single largest driver. Retail advertisers in Asia-Pacific pulled back after the European Union eliminated its de minimis exemption for low-value imports. Media and entertainment spending also normalized after a second quarter boosted by the FIFA World Cup. Finally, AI Mode queries grew quickly while earning less than traditional search. CFO Anat Ashkenazi added that Google started lapping the search acceleration that began in the third quarter of 2025.
What happens next for search query growth?
Sundar Pichai noted that Google's year-over-year search growth rate reached its highest level in five years, though the company did not disclose the exact rate or how queries are counted inside AI Mode sessions. According to the earnings call transcript, AI Mode queries average three times the length of traditional searches. Google now runs multi-turn conversations in AI Mode with tailored ads, meaning query counts could rise mechanically as conversations lengthen.
Frequently asked questions
Search and other revenue grew 12% to reach $63.35 billion in the third quarter, which was roughly $1.6 billion below analyst expectations.
Google executives pointed to foreign exchange impacts, retail advertiser pullbacks in Asia-Pacific, normalized media spending after the FIFA World Cup, and rapid growth in AI Mode queries that earn less than traditional search.
Alphabet shares fell about 13% on Thursday, marking the steepest one-day drop on record and erasing roughly half a trillion dollars in market value.
Philipp Schindler stated that strong growth in AI Mode queries had an impact on earnings because of lower monetization seen in AI Mode.
According to the earnings call transcript, AI Mode queries average three times the length of traditional searches.
Based on reporting by Search Engine Journal. Read the original article
