Is AI accelerating Google, Meta and Amazon’s dominance? Takeaways from Big Tech’s Q1
Alphabet, Meta and Amazon, three of the world’s dominant advertising companies, all announced Q1 earnings on Wednesday. The results? Strong continued revenue growth.
Alphabet reported 22% year-on-year revenue growth in Q1 to $109.9bn. Meta reported 33% year-on-year revenue growth to $56.3bn. Amazon’s advertising business grew 23.8% year on year to $17.2bn.
The three tech titans are dominating the global and UK advertising markets. According to Press Gazette‘s analysis of the latest AA/Warc data, Alphabet, Meta and Amazon collectively earned roughly two-thirds of the UK’s total media spend last year. In the US, the three businesses represent around 60% of the ad market.
AI investment was a common theme, with all three businesses pointing to developments in AI that have made automated advertising more effective and simpler for clients, including both for media and creative development.
However, concerns abound about the sustainability of capital expenditure on AI, which increased across all three businesses.
Investors appeared sceptical of Meta in particular, whose share price tumbled nearly 10% following the earnings release.
As media analyst and Media Leader columnist Ian Whittaker points out, while all the tech giants are facing concerns over a “wartime industrial mobilisation” for developing AI infrastructure, Meta’s less diversified balance sheet (98% of its revenue is derived from advertising), and the fact that it isn’t a cloud provider, may have investors uniquely spooked.
Alphabet
Alphabet reported 22% year-on-year growth in Q1 revenues to $109.9bn.
Within this, Google Search revenues grew 19.1% to $60.4bn, equivalent to 55% of the tech giant’s business.
YouTube advertising revenue grew 10.7% year on year in Q1 to $9.9bn, driven foremost by direct response advertising but also brand network advertising, according to chief business officer Philipp Schindler. However, YouTube’s subscription revenue, particularly for YouTube Music and Premium, is growing faster than its ad business.
CEO Sundar Pichai characterised search as having a “strong quarter”, with queries “at an all-time high”.
On the company’s earnings call, Schindler attributed revenue growth in part to the accelerated deployment of its AI assistant Gemini “across our entire ads infrastructure,” which he claimed is “helping businesses reach more customers in more places than ever before”.
“This is driving significant improvements across all areas of marketing and continues to fuel new performance breakthroughs,” he continued. AI, he claimed, is helping to boost ad quality, relevance, efficiency and effectiveness.
More than 30% of Google’s search customers are now using “AI-enabled” campaigns via Google’s AI Max or Performance Max suites. “These advertisers are seeing more conversion for the same spend,” Schindler claimed.
He acknowledged that Google’s search experience has changed with the advent and promotion of AI search, with consumers “no longer searching in fragments” but rather searching “conversationally” and sharing more context.
Schindler claims AI Overviews and AI Mode have driven “greater search usage and growth in overall queries, including commercial queries,” but did not provide specific details on how this is measured.
“We aren’t just bringing existing [ad] formats into AI experiences. We are reinventing ads for this new era,” he said.
That includes testing a new format for retailers who have been displaced by AI search tools servicing users with organic product recommendations.
Schindler also declined to rule out introducing ads into Google’s Gemini AI chatbot, though he said the company wasn’t “rushing” the matter.
While he said Google is currently focused on monetising AI Mode within its search product, Schindler added, “It’s fair to say that we really believe that a format that works well in AI Mode would transfer successfully to the Gemini app. So today, in the Gemini app, we’re focused on the free tier and subscriptions […] but let’s also be clear, ads have always been a big part of scaling products to reach billions of people. And if done well, ads can be really valuable and really helpful commercial information.”
Meta
Meta shrugged off a quarter that saw it come under intense legal and regulatory scrutiny for admitting to earning billions from fraud ads; being found by a jury (alongside YouTube) to have intentionally designed addictive platforms; being found liable for child sexual exploitation; being expelled by IAB Sweden; and being implicated in human trafficking; to report staggering 33% year-on-year revenue growth to $56.3bn in Q1, of which advertising accounted for 98%.
However, costs also jumped 35% to $33.4bn amid a surge in investment in AI infrastructure. Such rising costs have led Meta to announce it would cut one-tenth of its workforce in Q2, equivalent to 8,000 people, and not fill thousands more job openings.
Notably, Meta reported that the average price per ad increased 12% year on year, a sign of inflation in its pricing. This occurred as Meta increased ad impressions 19% year on year.
Meta CFO Susan Li called Q1 “a solid start to the year” with “strong execution” across its ads business, noting that the company is “leveraging AI to make it easier for businesses to manage their customers, develop ad creative, and engage with customers.”
Li added that Meta’s AI business assistant, which launched in 2023, has been fully rolled out to all eligible advertisers, helping them via buying services, personalised recommendations, and surfacing campaign insights, among other purposes.
This week, the company also announced it would open its own ad ecosystem to third-party AI tools, allowing advertisers to use their preferred tools, such as ChatGPT or Claude, within Meta’s own ad platform.
Li further revealed there are now over 10m weekly “conversations” between users and “business AIs” on Meta’s messaging platforms, up from just 1m at the start of 2026, and signalled she expects this to expand further in Q2.
Likewise, there are now 8m advertisers using Meta’s generative AI creative tools, with “particularly strong adoption among small- and medium-sized businesses.”
Writing in his Madison & Wall newsletter, media industry analyst Brian Wieser said that the results, taken together, “highlight how AI is expanding supply (more impressions), improving usability (easier campaign creation), and driving performance (better outcomes from automation)”. Wieser has previously predicted that AI-powered advertising revenue will grow to encompass one-quarter (26%) of total global ad revenue by 2030.
He further noted that Europe was the leading growth market for Meta (+40%, compared to +30% in the US and Canada and +29% in APAC) in Q1.
Amazon
Amazon’s advertising business grew 23.8% year on year in Q1 to $17.2bn. This continues to outpace Amazon’s subscription business, which grew 15% to $13.4bn.
On the company’s earnings call, Amazon executives attributed the strong advertising growth to the development of agentic commerce solutions and AI-driven ad creative tools.
“The way that our ads team has built tools and agents themselves is making it so much easier to do advertising,” said CEO Andy Jassy.
In February, the company rolled out its free-to-use agentic advertising tool, dubbed Creative Agent, in the UK, France, Germany, and Spain, after launching it last November in the US. It provides advertisers with a conversational “creative partner” that conducts product and audience research, brainstorms ideas, storyboards visuals and produces video and display ads that can be placed across Amazon Ads’ full portfolio, including on Prime Video and Twitch.
The agent, Amazon claims, can create a visual ad campaign from scratch “within the span of an afternoon”.
Jassy argued that this type of automated workflow is particularly appealing to smaller businesses, which can now execute ad campaigns on the platform at little cost, though this raises separate issues of media and creative quality.
“If you look at small- and medium-sized businesses that had to take weeks and months to do creative and to pick the right audience, all that is so much faster and so much easier because of our advertising agentic tools,” Jassy said. “And you no longer have to take as much time or spend as much money building the creative.”
Amazon’s broader advertising strategy has likely benefited from inking partnerships with other media owners to integrate their ad inventory into Amazon DSP, providing advertisers with a way to link brand advertising efforts with sales data from Amazon’s retail business. Competitors that have integrated into Amazon DSP in the last year include Global, Spotify, Netflix, Disney, SiriusXM, iHeartMedia, and Roku.
In addition, Prime Video is helping drive growth in both advertising and subscription revenues. Chief financial officer Brian Olsavsky commented that Prime Video “is now a large and profitable business in its own right”, thanks in part to its embrace of advertising.