Google and Meta lead Q4 with $82B and $58B in ad revenue

Advertising remains the main engine behind Big Tech’s earnings. In the fourth quarter and full-year results, Google, Meta, Microsoft, Amazon, and Reddit all show a familiar trend: ad revenue accounts for the largest portion of income, even as these companies invest heavily in AI infrastructure and new product development.

Here is how each company described what is driving its ad business and where inventory and demand are taking shape.

Google leans into AI-powered search while ads remain dominant

Google’s Alphabet said annual revenue surpassed $400 billion for the first time, with fourth-quarter revenue of $113.8 billion, up 18% year-over-year. Google Services generated $96 billion of that total, and advertising contributed $82 billion in the quarter, up 13% from a year earlier. Alphabet CEO Sundar Pichai said that AI investments and infrastructure are driving revenue across the business. 

Search advertising was the fastest-growing ad product, with revenue rising 17% year-over-year. The company said growth reflected broad strength across major verticals, with retail especially strong. It also noted that Search saw more usage in Q4 than ever before.

That usage growth is happening alongside visible changes to the search experience. Google said Gemini 3 is now integrated into AI Mode in Search, and AI Overviews at the top of results pages have also been upgraded to Gemini 3. These AI-generated summaries appear before traditional blue links, changing how users encounter information and eventually ads.

Google said it is in the early stages of monetizing AI Mode. The company is testing ads below AI-generated responses and piloting “Direct Offers,” which allow advertisers to show exclusive retailer offers to shoppers directly inside AI Mode. Google described the format as using AI to match relevant offers to users who appear ready to buy.

The company is also pushing agentic shopping to compete with the likes of OpenAI and Perplexity. Google recently launched the Universal Commerce Protocol, which will soon enable a new checkout experience to buy directly in AI Mode and Gemini from select merchants.

 On the video side, YouTube continues to complement Search. YouTube ad revenue grew 9% year-over-year to $11.4 billion, with combined ads and subscriptions pushing YouTube’s annual revenue past $60 billion for the first time. 

According to the report, YouTube ad growth was driven largely by direct response advertising, while Shorts continues to scale. Shorts now averages more than 200 billion daily views. In several countries, including the U.S., Shorts earns more revenue per watch hour than traditional in-stream YouTube ads, according to Google. 

Despite overall growth, Google’s Network advertising revenue, which covers ads on third-party sites, fell 2% year‑over‑year, highlighting softness in segments of the display market.

Google says it continues to expand its AI investments across search and advertising. Philipp Schindler, Google’s SVP and Chief Business Officer, said, “We are investing in AI to drive significant improvements across all areas of marketing. We are expanding the entire playing field that advertisers can compete on. AI gives businesses the ability to reach more customers in more places than ever before.”

Google’s 2026 capital expenditures are expected to range between $175 billion and $185 billion.

Meta says ads will remain its primary growth driver

Meta reported fourth-quarter revenue of $60 billion, up 24% year-over-year, and full-year revenue of $201 billion, up 22%. Advertising made up nearly 97% of total Q4 revenue. Ad revenue rose 24% year over year to $58 billion. Meta said ad impressions across its apps increased 18% in Q4, while the average price per ad rose 6%. For the full year, impressions grew 12%, and pricing increased 9%.

According to CFO Susan Li, growth was supported by increased advertiser demand and improved performance of ad products across Meta’s platforms. A key change is the growing importance of Instagram Reels. More than half of all Instagram ads in 2025 ran in Reels, up from 35% the previous year, according to a recent report. Watch time on Instagram Reels in the U.S. increased more than 30% year-over-year in Q4, which Li attributed to ranking and product improvements. This growth shows how short-form video is capturing user attention and ad spend.

According to the company, on Facebook, similar optimizations increased views of organic feed and video posts by 7% in Q4. Meta also said AI model consolidation on Facebook drove a 12% increase in ad quality during the quarter.

On the earnings call, Mark Zuckerberg said, “For the next couple of years, ads are going to be, by far, the most important driver of growth in our business. Meta says it’s expanding its AI business assistant to more advertisers after testing the tool in Q4. Click-to-message ads grew U.S. revenue 50% year over year, and paid business messaging on WhatsApp crossed a $2 billion annual run rate.

Meta is also integrating AI across its ad ecosystem. Advantage+ is now integrated into default ad campaigns, applying AI recommendations across targeting, placements, and budgeting. Li said Meta is also focused on providing more compute to AI models that power ads and ranking, and on connecting recommendation systems with large language models to improve ad quality. The platform is expanding ads to newer surfaces. Threads ads are rolling out globally to all users. On WhatsApp, Meta plans to complete the rollout of Status ads by 2026.

User engagement remained a key input into Meta’s growth, with Daily Active People (DAP) reaching 3.58 billion in December, up 7% year over year. Looking ahead, Meta expects Q1 2026 revenue between $53.5 billion and $56.5 billion. Full-year expenses are forecast to be between $162 billion and $169 billion, with capital expenditures ranging from $115 billion to $135 billion.

Microsoft’s search ads grow, but at a slower pace

Microsoft’s Q4 revenue hit $81.3 billion, with Search and news advertising increasing $4 million, a 7% rise, or 10% excluding traffic acquisition costs. While the growth rate has slowed compared with the prior year, the company is leveraging AI-powered search experiences to strengthen performance. However, Microsoft noted that this marked the slowest quarterly growth rate for search advertising since fiscal 2024. In Q2 fiscal 2025, search and news advertising revenue had grown about 12% overall and roughly 21% excluding traffic acquisition costs.

The company said Windows, Edge, and Bing gained share, contributing to advertising demand. In 2025, Microsoft rolled out Copilot Search, which integrates generative AI summaries alongside traditional results, and later expanded Bing’s generative search experience to all U.S. users. Microsoft is also exploring AI-driven brand agents and new ad formats that may shape future advertiser offerings. 

LinkedIn also contributed to advertising growth. Revenue from Marketing Solutions increased about 11%, and video ads on LinkedIn grew roughly 30% year over year. Microsoft reported that daily active users increased tenfold year-over-year.

The company says it will continue to invest in AI infrastructure. CEO Satya Nadella said Microsoft is still in “the beginning phases of AI diffusion,” with AI capabilities across cloud and enterprise offerings influencing revenue streams.

Amazon grows ad business across commerce and streaming

Amazon’s share of the digital advertising market continued to grow. The company’s Q4 ad revenue reached $21.32 billion, up 22% year-over-year, slightly above expectations. The growth is supported by expanded formats on its e-commerce and streaming properties. Ads on Prime Video are now live in 16 countries, while sponsored listings, display ads, and other placements continue to monetize Amazon’s shopping surfaces. 

Amazon has also invested in using its shopping data to help brands advertise outside Amazon. Its demand-side platform has secured media partnerships with Samsung, Roku, Netflix, and Disney. Amazon can place ads programmatically not only on Amazon-owned properties but also on partner sites and apps. These partnerships expand where advertisers can reach audiences, especially in connected TV and streaming environments, which are growing ad channels.

According to the earnings call, total Q4 revenue rose 14% year-over-year to $213.4 billion, and full-year 2025 net sales reached $716.9 billion, up 12% from 2024. Subscription services revenue increased 14% to $13.12 billion.

CEO Andy Jassy said growth in AWS, advertising-related services, and retail reflects ongoing demand. He added that Amazon expects to invest about $200 billion in capital expenditures in 2026, citing opportunities in AI, chips, robotics, and satellites. 

Reddit posts breakout ad growth tied to performance formats

Reddit reported Q4 revenue of $726 million, up about 70% year-over-year. Ad revenue increased 75% to $690 million. For the full year, ad revenue rose 74% to approximately $2.1 billion, and total revenue reached $2.20 billion, up 69%.

The company said growth was driven by higher advertiser demand across multiple verticals, improvements to its ad platform, including AI-assisted creative tools, and strong performance from performance-oriented ad formats. According to the report, eleven of the top 15 advertising verticals, including retail, pharma, and financial services, showed revenue increases of at least 50% in Q4.

User growth also supports monetization. Reddit reported 121.4 million daily active users in Q4, up 19% year-over-year. U.S. DAU grew 9%, while international DAU increased 28%. This growth outside the U.S. suggests Reddit is expanding its audience base globally, which could widen future ad inventory and demand.

In the earnings announcement, CEO Steve Huffman said Reddit is entering “the next era of Reddit, defined by sharper execution, global expansion, and product innovation that puts real people and conversations at the center.”

Reddit has already said it will focus on search as a strategic priority within its product roadmap. The company has described efforts to improve and unify its internal search experience, including work on an enhanced search interface that combines traditional keyword-based search with AI-driven responses from its Reddit Answers feature.

The common thread for advertisers

Across these earnings calls, advertising remains the financial backbone. At the same time, every company is adjusting how ads are created, targeted, and placed through AI systems and new surfaces like AI-powered search, short-form video, messaging, and commerce integrations.

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