Alphabet shares fell 10% after hours following its Oct. 28 third-quarter results. Investors were unnerved by the cost of its AI buildout and slowing search growth, Reuters reported.
The numbers gave investors plenty to weigh. Alphabet reported $127.6 billion in quarterly revenue, below analysts' $128.2 billion estimate, and adjusted earnings of $2.67 per share, below the $3.02 expected. Advertising revenue of about $82 billion missed the $83.4 billion forecast, according to Reuters.
Cloud growth met a costly buildout
Google Cloud revenue more than doubled to $30.71 billion in the quarter ended Sept. 30 and beat estimates. But that growth did not offset the advertising miss. Alphabet also reported negative free cash flow of about $9.1 billion, its second straight negative quarter, compared with expectations of near break-even, Reuters reported. CNBC put third-quarter capital expenditures at $51.36 billion.
Chief Financial Officer Anat Ashkenazi told analysts that Alphabet expected capital spending to rise significantly in 2027 from its 2026 forecast of $195 billion to $205 billion. She did not give a 2027 figure, Reuters reported. Google chief business officer Philipp Schindler attributed part of the slowdown in search advertising growth to greater use of AI Mode, where the company was still experimenting with ads.
Google also announced Gemini 4 Carbon on Oct. 28. It reported cybersecurity benchmark results and said access would begin that week for a subset of cyber defenders, with a broader rollout planned later.
