Google has kicked off 2026 with a major signal of where search is heading next: deeper AI integration, longer user queries, and new ad formats designed specifically for its emerging AI Mode experience. The company’s latest earnings reveal a search ecosystem that’s growing fast – even as the mechanics of how users interact with Google continue to shift.
Alphabet closed Q4 2025 with $113.8 billion in revenue, pushing the company past the $400 billion annual milestone for the first time. At the centre of that growth was Google Search, which climbed 17% year‑on‑year to $63.07 billion.
AI Mode Is Changing How People Search
Google’s leadership highlighted a clear trend: once users adopt AI Mode, they stick with it – and they search differently.
- AI Mode queries are three times longer than traditional searches
- Daily AI Mode usage in the US has doubled since launch
- A large share of AI‑driven searches lead to follow‑up questions
This shift suggests users are treating Google less like a search engine and more like a conversational assistant capable of handling complex, multi‑step tasks.
Google Begins Testing Ads Inside AI Mode
To monetise this new behaviour, Google has started experimenting with ad placements directly within AI Mode.
Early tests include:
- Ads positioned beneath AI‑generated responses
- Direct Offers, a pilot allowing advertisers to display exclusive promotions to high‑intent shoppers
- Integrated checkout, enabling users to complete purchases directly within AI Mode
Google says these longer, more detailed queries are creating entirely new ad inventory, particularly for searches that were previously difficult to monetise.
For brands working with SEO Leeds, SEO Yorkshire, or a performance‑driven PPC agency Leeds, this signals a future where visibility inside AI‑powered search journeys becomes just as important as traditional keyword bidding.
YouTube Growth Slows Amid Election Comparison
YouTube advertising revenue reached $11.38 billion, up 9% but slightly below expectations. Google attributed the softer performance to the unusually high political ad spend seen in late 2024, which created a tough comparison period.
Subscription growth also played a role, as more users shift to YouTube Premium, ad impressions naturally decline, even though overall revenue improves.
Cloud and AI Investment Continues to Accelerate
Google Cloud delivered one of the strongest performances of the quarter, jumping 48% to $17.66 billion. Alphabet also announced plans to invest $175-185 billion in capital expenditure for 2026, nearly doubling its 2025 spend, a clear indicator that more AI‑powered features are coming across Search, Cloud, and consumer products.
Why This Matters for Marketers
Search revenue growth has accelerated every quarter throughout 2025, rising from 10% in Q1 to 17% in Q4. Google maintains that AI features are expanding search activity rather than cannibalising it.
The company insists it has not seen evidence that AI Mode reduces referral traffic. Whether that holds true for publishers and ecommerce brands is something analytics teams will need to monitor closely.
For now, Google’s message is clear: AI is increasing engagement, lengthening queries, and opening new monetisation opportunities.