Google’s ad revenue grew 14% year over year to $81.6 billion in Q2 as artificial intelligence-powered features bolstered marketing performance, according to an earnings statement from parent Alphabet. Total revenue increased 24% YoY to $119.8 billion, above expectations.
Executives said that Gemini AI is delivering both increased relevance to users and greater value to advertisers in search, the company’s largest business segment. Search and other revenues were up nearly 17% YoY to $63.3 billion for the period ended June 30. The impressive gains back up “Google's claim that AI is additive to search, not a replacement,” Emarketer principal analyst Nate Elliott said over email.
The precision provided by Gemini is also helping to advance Google’s bets on commerce-enabled shopping campaigns, which saw a 20% improvement in delivering highly relevant ads thanks to AI.
“It's really important to understand that Gemini supercharges our ability … to understand what people are looking for and match the right ads,” Google Chief Business Officer Philipp Schindler said on an earnings call with investors.
YouTube also posted a strong Q2, with ads revenue increasing roughly 13% YoY to $11 billion thanks in part to the World Cup. Google underscored its ability to connect advertisers with popular content creators around cultural events like the soccer tournament. Over 1.7 billion unique global viewers watched World Cup-related content on YouTube for the tournament this year.
“We launched custom sponsorships to put brands at the heart of the world's biggest moments as they unfold on YouTube, using AI to dynamically surface videos tailored to a brand's desired moment,” Schindler said. “Brands continue to partner with YouTube creators to engage new audiences.”
As people more frequently tune into YouTube via their TV screens, Google is investing in ways to bring commerce into the living room as well. At its Brandcast presentation in the spring, the platform showcased connected TV integrations that allow viewers to complete a purchase on their TV in just two clicks.
“We're going to continue to see a lot of innovation, in my opinion, and direct response with shoppable ad formats in the living room,” Schindler said.
While AI is improving Google’s core ads business, the technology is still commanding eye-popping costs. Google around the earnings report revised its capital expenditures for the year to land in the range of $195 billion to $205 billion compared to a prior estimate of $180 billion to $190 billion. Expenditures will also “increase significantly in 2027,” CFO Anat Ashkenazi reiterated.
CapEx at other major tech firms like Meta and Amazon will be closely watched this earnings season as investors more sharply question when steep investments in resource-intensive AI technology will pay off. Google shares were down Thursday morning following the earnings report.
