YouTube reportedly rolls out AI video tools as the platform inches closer to $40B ad revenue

Video streaming giant YouTube announced that it is launching AI video tools to cater to Short content creators on its platform. YouTube’s rollout of AI video aids comes in the wake of the platform’s parent company, Alphabet’s Q2 earnings report in 2025, which notes that YouTube is set to surpass $40 billion in ad revenue in 2025, as per Dexerto.

In a post announcing its new AI offerings for Shorts creators, YouTube noted that its video generation model, Veo 2, will now enable creators to transform any still photograph into a video Short. The feature, called ‘Photo to Video,’ is powered by Google’s AI assistant Gemini. Users can select a prompt, based on which Gemini will animate a still picture into a video. In the initial phase of its launch, this feature will only be available in the United States, Canada, Australia, and New Zealand, as per YouTube.

YouTube is also offering a host of generative effects for its Shorts creators. In a post introducing the feature, the platform noted that users can add generative effects powered by Veo, which can not only transform hand-drawn doodles into images but can also turn selfies into videos.

Although the Vet-powered offerings from YouTube are currently limited to Veo 2, the platform shares that it hopes to eventually assimilate its AI video tools for Shorts with Veo 3.

Additionally, YouTube is offering users access to GenAI creation tools. In a post calling it an “AI playground,” the platform clarified that with Gen AI, creators can examine examples and prompts to generate everything from images and videos to music.

At the moment, access to the AI playground is only functional for users in the United States and Canada, as well as Australia and New Zealand.

We're introducing new tools designed to make Shorts creation easier & more fun 📹

Transform your ideas into reality with Photo to video, new generative effects, & a simplified way to access all of our GenAI creation features

Info in the thread below & this article:…

— TeamYouTube (@TeamYouTube) July 23, 2025

YouTube’s performance in the second quarter of 2025

In a message from Google and Alphabet’s CEO, Sundar Pichai, the tech executive noted on July 23 that YouTube is the most viewed streaming platform in the United States by watch time. Pichai also commented on the platform’s dominance in the category of sports content, sharing that 40 billion hours of sports-related content is consumed on YouTube on an annual basis.

In addition to expressing excitement over the new AI video tools for YouTube Shorts, Pichai also revealed that Shorts receives an average of 200 billion views on a daily basis.

According to CNBC, YouTube’s advertising revenue for the quarter was $9.8 billion.

Furthermore, Pichai commented on the revenue generated by YouTube as well as its subscriptions, as per a transcript of the Q2 2025 earnings call provided to Fortune, and said,

“We continue to see strong performance in YouTube as well as subscriptions, reflecting great momentum across these high growth businesses. In The US, Shorts now earn as much revenue per watch hour as traditional in stream on YouTube. And in some countries, it now even exceeds in stream straight.”

As per Fortune, Philipp Schindler, the senior VP and Chief Business Officer of Alphabet, also commented on YouTube’s revenue generation via subscriptions versus revenue generation via advertising, and added,

“We had a strong growth across YouTube subscription products, which includes, just to be clear, YouTube TV, YouTube Music and Premium. And I think one common theme for our subscription services in general is offering viewers more choice here. We also have a very deep understanding of the monetization side here, where are we monetizing more with ads, where can we potentially monetize more with subscriptions. So I think we will continue this as a double tier strategy actively going forward.”

For now, it remains to be seen how creators react to the AI video features offered by YouTube as they slowly roll out all over the world.