Which terminates on the other side where everything is plaintext again. https is a transport level protocol, so it protects you from people (trivially) snooping on your data in transit but anybody at google with enough clearance has access to that data.
It's creepier than you think - ever since it began making suggestions, long before Google Instant, Google has been quietly logging things you didn't search for.
Not that I suspect it helps anything, but at least if someone finds my computer or something, that data isn't two clicks away.