Alphabet Q4 2025 earnings: AI Overviews queries double since launch, Gemini app at 750MM MAU

Alphabet released its Q4 2025 earnings last night:

• Overall advertising revenue grew by 13.6% to $82.3BN.
• Search revenue grew by 16.7% to $63.1BN.
• YouTube advertising revenue grew by 8.7% to $11.4BN.
• Google’s Network segment revenue declined on a year-over-year basis for the 14th consecutive quarter by 1.6% to $7.8BN.
• The Subscriptions, Platforms, and Devices segment grew by 16.7% to $13.6BN.

Notably, both YouTube advertising and Subscriptions revenue growth decelerated in the quarter: YouTube advertising revenue had grown by 15% year over year in Q3, and Subscriptions revenue had grown by 20.8%. Alphabet beat analyst expectations for the quarter on both revenue and earnings, although it indicated that its 2026 capital expenditures would amount to between $175 and $185BN, beyond what analysts expected. As I write this, Alphabet’s stock is down in pre-market trading.

Search revenue growth accelerated in the quarter to 17%, up from 15% last quarter. In prepared remarks, Sundar Pichai revealed that AI Overviews queries have doubled “since launch” in the US, and that AI Mode queries are “3x longer than traditional searches.” All of this serves as support for my general thesis in the Google’s Gambit series (see Part One, Part Two, Part Three, and the podcast episode), which is that transitioning the core search experience to an AI-enabled interaction would increase the number of queries per session and therefore the number of impressions served.

Note that this isn’t an ad load increase but an engagement increase: ad load in AI Overviews and AI Mode may actually be lighter than traditional search while still delivering more aggregate impressions. This is analogous to how I’ve described Meta’s Renaissance, which is that shifting the source of the Facebook and Instagram feeds from a friend graph to an open graph would provide a larger, more diverse pool of content from which to draw and thus increase time spent in those apps.

Google discussed the application of Gemini to its Search ad stack, including for the “understanding of intent” to parse search queries, for agentic actions in campaign creation and optimization, and in creative production. Google highlighted in prepared remarks on the earnings call that Gemini was used to create 70 million creative assets “via text customization in AI Max and PMax” in Q4.

With respect to YouTube, Google made two noteworthy disclosures:

• Video podcast viewtime on living room devices increased by 75% from October 2024 to October 2025, to 700MM hours;
• Over 1MM channels per day in December 2025 used YouTube’s AI-enabled creator tools.

I’ve maintained the chart above, which is based on a simple linear regression using the total YouTube revenue values that Google has sporadically shared, since I published YouTube, the CTV behemoth. In the earnings call, another data point about YouTube total revenue was shared: that “YouTube’s annual revenue surpassed $60 billion across Ads and Subscription.” Fortunately, including $60BN as the total value for 2025 didn’t materially change the output of the model, which had calculated $59.92BN for the year (admittedly, this value doesn’t “surpass” $60BN, but I take surpass to mean “rounds down to,” which gets the total close enough).

During the Q&A, the company addressed the tradeoff between ads in YouTube and YouTube subscripton revenues. That’s included below, where I present excerpts from the earnings call that I found particularly insightful.

On the composition of YouTube revenue in the quarter:

For the full year 2025, YouTube’s annual revenue surpassed $60 billion across Ads and Subscription. In Q4, YouTube Ads was driven, indeed, by strong growth in direct response … On the Brand side, as an ad share, the largest factor negatively impacting the year-over-year growth rate was lapping the strong spend on U.S. elections. We also saw a slight impact in some other brand-related verticals.

On the dynamic between advertising and subscription revenue:

But taking a step back, I think it’s important to think about YouTube Ads and Subs holistically, because when a user shifts from being an Ads-supported user to a YouTube Music and Premium customer, it has a slightly negative impact on YouTube Ads revenues but a positive impact on our business … And we had strong revenue growth in YouTube Subscriptions this quarter, particularly in the YouTube Music and Premium category.

On innovation in direct response YouTube ads:

And on top of that, we actually see opportunity also for upside with performance advertising. There’s a lot of momentum with Demand Gen adoption across small and medium advertisers … We’re also excited about the opportunity for continued Ads innovation and direct response, for example, shoppable formats, including in the living room, which is then helping drive strength in Retail, the continued momentum in Shorts, and so on. So overall, we are quite excited. 

On Google’s recently unveiled Universal Commerce Protocol (UCP):

Obviously, people go through a lot of commercial journeys across many of our surfaces:  Search, YouTube, Gemini App and so on. So I think as well as we support, through Cloud and Ads, our entire Retail partners as well … The opportunity to improve the experience, I think, can be kind of a huge foundational uplift here. But it’s important that we are approaching it, keeping in mind that our users, as well as merchants here and figuring out that value … Part of what’s been good in designing the Universal Commerce Protocol is it makes it much easier for users to complete transactions. But at the same time, it allows merchants to help showcase the range of their offerings, if they want to make promotions, et cetera. So all of that is built into the protocol.

On the growth of the Gemini chatbot from 650MM MAU to 750MM MAU in Q4:

It’s not just a growth in monthly active users, but there was a sharp increase in engagement per user on the app … So all the metrics, be it active usage, the intensity of usage, retention, all showed distinct progress across iOS, web, Android, et cetera, and geographically globally … Obviously, there are many people who are getting a deeply AI-native experience in the context of AI Mode and Search as well, and we are definitely seeing strong growth and progress. And the introduction of Gemini 3 in AI Mode was a very positive driver as well.

On Search monetization and the applications of AI to Search:

And maybe I’ll quickly add the vertical perspective: Retail, Finance, Health drove actually the greatest contribution to Search revenue. Nearly every major vertical actually accelerated in Q4 … We see AI Overviews and AI Mode continue to drive greater Search usage and growth in overall queries, including important and commercial queries. Gemini-based improvements in Search Ads help us better match queries and craft creatives for advertisers … I talked about the understanding of intent and how this has significantly expanded our ability to deliver Ads on longer and more complex searches that were, frankly, previously difficult to monetize. AI Max, for example, is already used by hundreds of thousands of advertisers and continues to unlock billions of net new queries in that sense … We see strength with SMB advertisers expanding their budgets and adopting automation tools leading to better ROI. On the creative side, we’re using Gemini to generate millions of creative assets via text customization in AI Max and PMax and so on. So we’re very pleased with what we’re seeing here. 

On monetizing the Gemini chatbot:

In terms of the Gemini App, today, we are focused on the free tier and subscriptions and seeing great growth, as Sundar discussed. But Ads have always been part of scaling products to reach billions of people, and if done well, Ads can be really valuable and helpful commercial information, and at the right moment, we’ll share any plans. As we’ve said, we’re not rushing anything here.