Google’s revenue derived from advertising rose 13.6% year over year to $82.3 billion in Q4 while the search giant’s annual revenue surpassed $400 billion for the first time in 2025, according to an earnings statement from parent Alphabet.
Search and other, the company’s largest segment, grew ad revenue 16.7% YoY to $63.1 billion in Q4. YouTube ad revenue climbed 8.7% to $11.4 billion, propelled by direct-response formats, for the end-of-year period that includes the holidays.
YouTube’s rate of growth declined roughly five percentage points from the year-ago period, which executives attributed to lapping a moment of substantial political ad spending in 2024. But Google is also starting to think about YouTube’s monetization differently as focus turns to subscription-based offerings, including its connected TV package, music streaming service and ad-free premium tier.
“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 ad-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,” said Google Chief Business Officer Philipp Schindler in response to an analyst question about the YouTube results.
YouTube generated more than $60 billion in revenue across ads and subscriptions last year and is planning to launch more plan options for YouTube TV. The video platform has been ranked the No. 1 streaming platform on living screens for nearly three years running, according to Nielsen estimates, and has recently struck deals to carry major broadcast events, including the Oscars beginning in 2029. Schindler said Google is experimenting with bringing new ad formats to YouTube, such as shoppable experiences available via living room screens, that could shore up strengths in direct response.
Artificial intelligence was another major point of discussion during the earnings report, with Google’s Gemini app seeing an “extraordinary period” of growth in Q4, CEO Sundar Pichai said. Google sees AI as enhancing advertising in three key areas: ads quality, tools for advertisers and new AI-powered user experiences. Advertisers in Q4 created nearly 70 million creative assets with Gemini customization features available via AI Max and Performance Max campaigns, according to Schindler.
“[Gemini] has significantly improved our ability to systematically deliver more helpful high-quality ads, contributing to a meaningful reduction in irrelevant ads served,” said Schindler.
Google’s AI tendrils are also extending further beyond its own ecosystem. Apple partnered with Google in January, turning to Gemini models to power AI features like Siri. Retailers including Target and Walmart are also teaming with Google to explore the potential of agentic commerce.
Google’s AI bets continue to carry a staggering price tag, and the development costs are only primed to get steeper, a trend that has stoked greater investor concern. Capital expenditures reached $91.4 billion in 2025, largely driven by the AI spree, and are forecast to land between $175 billion and $185 billion this year.
