The ad industry spent years debating whether AI would hollow out Google‘s business. Instead, Google handed advertisers an AI toolkit and turned it into an opportunity. The company’s latest numbers tell the story plainly: ad revenue of $82.28 billion in Q4 2025, up 13.5% year over year, with total annual revenue crossing $400 billion for the first time.
At the heart of this push is a suite of AI-powered ad tools like AI Max and Performance Max that Google claims are delivering extraordinary results for brands. Canadian fashion retailer Aritzia is an example. In an interview published on Tuesday, Courtney Rose, Google’s VP of Retail Ads, told ModernRetail, “When they enabled AI Max, they saw a 80% increase in revenue.”
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Rose shared an example of a natural-language search, asking Google for outfit suggestions for a spring trip to Atlanta, including a sweater, purse, and jeans, instead of using simple keywords like “blue cashmere sweater.” That richness allows Google’s Gemini models to decode not just what shoppers want, but why, creating far more precise ad matches.
Rose highlighted that 15% of daily Google searches are entirely new, making AI-driven ad matching crucial for retailers who can’t predict every keyword.
“Search is not some zero-sum game. Everything we have seen in the last few years is that search is in this expansionary moment,” Rose said.
Rose said Google has no current plans to add ads to Gemini, but notes ads in AI mode are performing well and offering valuable insights for retailers. The search engine is doubling down with new formats like “direct offers.” It’s a feature that lets brands like E.l.f. Beauty, Chewy and L’Oréal present personalized promotions to shoppers who show purchase intent within AI Mode.
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There’s also a new “business agent” feature letting retailers like Poshmark and Reebok shape how they appear in AI search results, in their own brand voice, said Rose.
Amazon.com and OpenAI are experimenting with their own AI ad formats, though results have been mixed. Perplexity began phasing out its ads a year and a half after introducing them, while Amazon’s sponsored prompts inside Rufus are reportedly generating limited traffic.
