AI boosts Q2 2025 ad revenue across Google, Meta, and Amazon
Big tech companies are leaning into AI to scale ad performance and stay ahead in digital markets

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In the second quarter of 2025, big tech companies saw strong gains in advertising revenue. Across the board, AI adoption drove this ad revenue growth and shaped campaign performance. Google, Meta, Microsoft, Amazon, and Reddit are all leaning heavily on AI to improve ad targeting, optimize pricing, and boost campaign performance. This signals where digital ad trends are headed and what tools might become important.
Google reports strong ad revenue
Google's parent company, Alphabet, posted total revenue of $96 billion, beating analyst expectations of $94 billion, according to LSEG data. Of that, $71 billion came from advertising, making up roughly three-quarters of the company’s total revenue. That’s a 10% increase from the same quarter last year, beating expectations of $69.47 billion. Last year, the company generated $65 billion.
On the earnings call, CEO Sundar Pichai said the results “reflect the strength of our advertising business and our strategic investments in AI and video.”
YouTube alone brought in $10 billion in ad revenue this quarter, up from $9 billion a year ago. That’s a 13% year-over-year jump, slightly ahead of analysts’ projections. Shorts played a major role in this growth. Pichai shared that revenue per watch hour on Shorts is now comparable to that of in-stream video ads in the U.S., and in some markets, it even outperforms them. This shift is key for advertisers focused on mobile-first or short-form campaigns.
YouTube has been seeing growth in recent times. The video platform has led U.S. streaming watch time for over two years. A recent study says YouTube leads AI chatbot referral traffic in May, with 37.9 million visits. The platform now has 125 million paying subscribers, up 25 million from last year.
AI remains a central part of Google's growth strategy. The company’s Search segment earned $54 billion this quarter, up 12% year-over-year. Features like AI Overviews and AI Mode are now available in the U.S., India, and recently in the U.K., contributing to increased query volumes and more engagement.Â
Google says AI Overviews now support over 2 billion monthly users and drive more than 10% of global search queries. AI Mode has reached 100 million monthly active users in just two months.
Meta doubles down on AI-led ad optimization
Meta also posted strong Q2 results, with total revenue at $48 billion, up 22% year-over-year. Advertising alone contributed $47 billion to Meta’s revenue. That’s a 21% year-over-year increase, exceeding expectations of $44 billion. Mark Zuckerberg credited the jump to improvements in AI-powered ad targeting and campaign automation.
“We have had a strong quarter both in terms of our business and community,” Zuckerberg said, before adding that Meta’s ad momentum was due in part to generative AI. According to Meta, ad conversions increased by 5% on Instagram and 3% on Facebook as a result of these tools. The company also reported an 11% rise in ad impressions and a 9% increase in the average price per ad.
Zuckerberg was clear on the earnings call: “A meaningful percentage of our ad revenue now comes from campaigns using one of our generative AI features.” For small advertisers, these tools lower the cost and complexity of building creative. For agencies and larger brands, they offer new ways to optimize campaigns, he explained.
Like Google, Meta is going all in on AI to grow its ad business. According to Zuckerberg, artificial intelligence technology unlocked "greater efficiency and gains across our ad system." Last year, the company changed how it recommends ads. Meta now uses a newer AI system that relies less on human-defined behaviors and more on dynamic learning from user activity. This shift from Deep Learning Recommendation Models (DLRMs) is intended to surface more relevant ads and improve performance.
Zuckerberg said Meta had a strong quarter that will help it continue to “invest heavily” in artificial intelligence. In May, he said AI is Meta’s primary focus to scale its ad business, calling it the “ultimate business agent.” Reports in June say the company already plans a full ad automation process next year. This could allow Meta’s systems to handle the campaign process end-to-end.
In terms of engagement, Meta’s family of apps grew to 3.48 billion daily active users, up from 3.43 billion last quarter. AI-powered recommendation systems are playing a big role in that. Zuckerberg said recent AI upgrades led to a 5% increase in time spent on Facebook and 6% on Instagram during the quarter.
Microsoft pushes AI targeting across ad platforms
Microsoft didn’t break down its ad revenue in full, but the company reported a 21% year-over-year rise in Search and News advertising, excluding traffic acquisition costs. That growth was fueled by stronger demand and newer AI-powered campaign targeting and measurement tools.
Microsoft CEO Satya Nadella tied the company’s growth to a broader shift. “Cloud and AI is the driving force of business transformation across every industry and sector,” he said. The company noted that improved ad relevance and better monetization across Bing, Edge, and its publisher network helped drive performance.
Microsoft is also increasingly focused on video ads to drive revenue. The company introduced First Impression Ads on LinkedIn in June, which give brands 24-hour vertical video spots at the top of user feeds. This format is aimed at B2B marketers looking for high-impact placements.
Overall, Microsoft generated $76 billion in revenue, an 18% year-over-year increase, beating analysts’ estimate of $74 billion.
Amazon grows ad revenue and bets big on streaming and AI tools
In its Q2 report, Amazon reported a 13% increase in total revenue to $168 billion this quarter. Advertising alone brought in $16 billion, a 23% jump year-over-year.
The e-commerce platform also continues to improve its retail offerings. The company claimed it held its biggest Prime Day event ever, with customers saving billions of dollars and independent sellers achieving record sales.Â
Amazon’s ad business has also expanded into new territory. A recent integration with Roku allows advertisers to access Amazon’s authenticated Connected TV audience, which the company says reaches 80 million U.S. households. Prime Video also continues to add more live sports content, which Amazon says is helping drive streaming ad revenue.
The company has been investing in generative AI tools that help advertisers create campaigns directly from text prompts. CEO Andy Jassy emphasized Amazon’s deep investment in AI. “Our conviction that AI will change every customer experience is starting to play out,” he said. The company says AI has helped improve operational efficiency and customer engagement, with features like Alexa+ and a growing shopping assistant tool.
Reddit’s ad business sees massive growth with AI-powered tools
Reddit reported $500 million in total revenue, up 78% from last year, beating Wall Street’s $426 million estimate. Advertising made up 93% of that total, or $465 million, growing 84% year-over-year. The company told shareholders that "advertising revenue growth was driven by year-over-year growth in impressions and pricing." Other revenue sources contributed $35 million, growing 24% year-over-year.
Reddit’s ad business continues to scale with new ad products, including Dynamic Product Ads, which personalize product placements based on user behavior. In late June, it launched Reddit Insights and Conversation Summary Add-ons. These tools use community intelligence to surface Reddit discussions below ads.
The company said Shopping Ads doubled return on ad spend compared to standard conversion campaigns. Reddit also shared that it’s now the most cited domain for AI across all major models.
With 110.4 million daily active users and rising engagement, Reddit is showing advertisers that it's more than just a niche platform. This figure is up 21% from last year’s 91.2 million. Reddit’s Weekly Active Uniques (WAUq) averaged 416.4 million, up 22% year-over-year.
AI is shaping the future of advertising
Across every company this quarter, the common theme is artificial intelligence. Whether it’s Google using AI to drive YouTube revenue or Meta optimizing campaign conversions, AI is becoming the engine behind modern advertising performance.
These platforms are adding AI features and rebuilding how campaigns are created, targeted, delivered, and measured. Understanding how to work with these tools is becoming essential for advertisers and marketers.
With companies continuing to invest in AI to scale their ad business, it’s clear that this shift will define how ads are bought and sold in the next few years.
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