"In its fourth-quarter earnings call, Alphabet highlighted that AI-powered search experiences, such as AI Overviews and AI Mode, are driving greater usage and longer, more complex query sessions. The company's Gemini family of large language models (LLMs) is also driving several improvements that have helped ads match better with intent, reduced irrelevant ads, and enabled monetization of longer, more complex queries that were previously difficult to monetize."
"Additionally, the company is experimenting with additional monetization avenues within AI Mode, including testing ads shown below AI-generated responses, and a pilot program called Direct Offers that lets advertisers show exclusive merchant deals to shoppers who are ready to buy in AI Mode. The company also claimed that users will soon be able to complete purchases directly in AI Mode, without being redirected to external websites."
Alphabet entered 2026 with record revenues, accelerating growth in Google Cloud, and aggressive AI investment plans. Investors are questioning whether AI will drive further growth or undermine it. Early data indicate AI-powered search features are increasing usage and producing longer, more complex query sessions. Gemini LLMs have improved ad-intent matching, reduced irrelevant ads, and enabled monetization of queries that were previously hard to monetize. Alphabet is testing ads below AI responses and piloting Direct Offers to show exclusive merchant deals to ready-to-buy shoppers. Users will soon be able to complete purchases directly in AI Mode, supported by a Universal Commerce Protocol to enable agentic commerce.
Read at The Motley Fool
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