AI Search Pressures Advertising Revenue, Google Plans to Counter with More Ads
November 2, 2026 · 2 min read
Also published in Português (Brasil)
Google presented strong quarterly results but faced pressure from high AI expenditures and a dampened advertising business due to the AI search. The tech giant is exploring ways to counteract these challenges with increased advertising efforts. While the AI boom has generated substantial income, it has also led to significant investments in AI infrastructure, creating concerns for investors regarding the negative impact on search and advertising revenue.
According to Google's Chief Business Officer, the AI mode yields less revenue compared to traditional search. The company reported its highest growth in search queries in five years, yet the revenue from its search division only increased by twelve percent compared to the same quarter last year, falling short of analysts' expectations. In the previous quarter, Google had achieved a growth of seventeen percent in this area.
The company aims to address the issue of lower ad monetization in the AI mode in the long run. Advertisers may need time to understand the advantages of advertising in AI searches. Google's analyses indicate that users find this ad format more relevant and helpful than those seen on traditional search result pages. In response, Google announced plans to expand its advertising offerings in AI mode to countries including Australia, Canada, Kenya, New Zealand, and Pakistan, with future plans for Brazil, Mexico, and the United Kingdom.
In the United States, Google intends to introduce "multiturn ads" that will allow multiple ads to appear in a single AI search session, changing as the queries in the conversation evolve. However, it may take time before these changes lead to a significant recovery in Google's advertising revenues. In the third quarter of 2026, the traditional search business accounted for less than half of the total revenue for the first time in the company's history. This, along with high AI expenditures and unmet analyst targets, has left investors unsettled.
Following the announcement of the quarterly results, Google shares fell by as much as twelve percent on the Nasdaq, resulting in a dramatic loss of 500 billion US dollars in market value.