Alphabet's AI Features Are Boosting, Not Replacing, Google Searches
Google has long worried that generative AI could replace traditional search queries and hurt its advertising business. However, recent data suggests the opposite is happening: Alphabet’s CEO Sundar Pichai noted in Q2 earnings reports that features like AI Overviews and AI Mode are increasing user engagement with Google Search. In the second quarter of 2026, Google Search and other ad revenue rose by 17% year-over-year to $63.3 billion, driven by a 13% increase in paid clicks and higher average cost per click. AI Mode now has over one billion monthly active users and is driving more complex queries that lead to additional searches. While Alphabet’s core search business remains strong—accounting for the majority of its revenue—the company faces rising infrastructure costs as it scales up AI capabilities. Investors are watching closely whether these expenses can be offset by increased ad revenues from new formats like conversational ads and sponsored product recommendations.
Topics: Advertising Revenue Artificial Intelligence Company Earnings Search Engine Growth