Google says AI Mode drives fastest search-query growth in five years

Google says AI Mode is driving its fastest search-query growth in five years. Those queries currently earn less advertising revenue than traditional searches, a gap executives are framing as an investment rather than a loss. Sundar Pichai told analysts on the earnings call that AI investments helped lead to the company's fastest search query growth in five years, according to Yahoo Finance's report on the call.

The tension is that Google makes less money per AI query than per traditional search. Yahoo Finance reported that executives said the strong growth of AI Mode contributed to a deceleration in revenue growth for that reason. Alphabet's stock plunged 12% on Thursday, shedding nearly $500 billion, according to the same report.

Google's argument is that the lost revenue should be treated the way it treats other AI spending. Chief business officer Philipp Schindler said, "The majority of AI mode queries are incremental, creating more monetization opportunities over time." He also said user research shows people are comfortable with ads on these surfaces. Pichai, asked whether AI agents could eat into search revenue, described the same dynamic as an expansion opportunity, pointing to how adding AI chat to search let people ask more and do more.

Google's case rests partly on the word incremental. The reporting does not say how Google measures that distinction or what share of AI Mode queries it counts as new. So the bet depends on two questions the sources leave open. Will advertisers keep paying for AI Mode placements? Do the extra queries generate enough total ad value to offset the lower value of each one?

Forward Future's roundup of the same story, which Matthew Berman's newsletter carried, treated the AI Mode queries the same way Google did. It framed them as a bet that people are moving from links to conversational answers, and that Google would rather lead that shift than protect the existing format.