AI Impact on Search? Google Says: Quite the Opposite

AI threats have not yet arrived, and Google's search business has reached a new revenue high.

Despite market concerns that AI startups may challenge Google's dominance in the search engine space, the latest financial report shows that the tech giant's defensive strategies are proving effective. Google's parent company Alphabet's second-quarter search revenue reached a record $54.2 billion, a 12% year-on-year increase, surpassing analysts' expectations of $52.9 billion.

On Wednesday, Alphabet CEO Sundar Pichai stated that the company's "AI Overview" tool has surpassed 2 billion monthly active users, a significant increase from 1.5 billion in the previous quarter.

Reportedly, this AI tool allows users to see answers generated by the Gemini model above traditional search results, directly competing with chatbot services from rivals like OpenAI.

Pichai stated:

“We see AI expanding the ways people search and access information.”

“AI features are prompting users to conduct more searches as they realize that search can meet more of their needs.”

Independent analysis from search engine optimization company BrightEdge shows that search ad impressions have increased by 49% in the year since the launch of the AI Overview tool.

Potential Challenges Test Resilience

Evercore ISI analysts noted in a research report this month that market research shows that despite fluctuations in the advertising market due to tariffs and macroeconomic uncertainty in April, advertising budgets still achieved year-on-year growth in the second quarter. A relatively healthy advertising market environment has supported Google's strong search revenue performance.

Despite the current strong performance, the resilience of Google's search engine still faces future tests.

According to media reports, while the AI Overview has increased the number of links users see, industry data shows that the number of times users actually click on revenue-generating links has declined—when the AI Overview directly provides the needed information, users no longer need to click on links.

Another unknown factor is the AI-driven web browsers launched by startups like Perplexity, as well as reports that OpenAI is also developing similar products, which may change the way people access information and pose a challenge to Google's Chrome browser.

Google is Taking Defensive Measures

To address these threats, Pichai announced an increase in capital expenditures for 2025 from the previously planned $75 billion to $85 billion. Google CFO Anat Ashkenazi also stated that the company's spending will further increase next year.

Additionally, Google plans to maintain its advantage by modifying the Chrome browser, integrating Gemini into more products, and developing AI features like "Circle Search" on Android phones that are difficult for competitors to replicate Historically, Google has taken defensive actions when threats arise.

Twenty years ago, when search shifted to mobile devices, Google acquired Android to develop the operating system; as the iPhone became popular, Google paid Apple billions of dollars each year to make its search the default option in Safari; nearly three years ago, when the AI boom began and concerns were raised by Microsoft's Bing, Google increased its investment in AI computing, ultimately resulting in Microsoft not significantly eating into its market share