Alphabet shares fell nearly 13% Thursday after quarterly results showed advertising revenue below estimates and investment outlays above operating cash generation, highlighting the cash demands of its AI expansion.
The decline erased more than $500 billion in market value, bringing Alphabet’s valuation down from $3.97 trillion to $3.46 trillion, Anadolu Ajansı reported. The Associated Press described the session as the company’s worst trading day in more than 20 years.
For the quarter ended Sept. 30, Alphabet reported revenue of $127.6 billion, up 25% from a year earlier. Search and other revenue rose 12% to $63.35 billion, and the company said year-over-year growth in Search queries reached its highest rate in five years.
Reuters reported that Google advertising revenue was $82 billion, compared with an analyst consensus of $83.4 billion from LSEG. Alphabet’s results showed $42.3 billion in operating cash flow and $51.4 billion in capital spending, most of it directed to technical infrastructure. Reuters reported free cash flow was negative $9.1 billion.
Google Cloud revenue rose 103% to $30.7 billion. Alphabet cited enterprise demand for AI infrastructure and solutions, along with sales of its TPU systems. Cloud growth offered a bright spot as shareholders absorbed the stock decline.
On Alphabet’s Oct. 28 earnings call, Chief Business Officer Philipp Schindler said foreign exchange was the largest reason search-ad growth slowed from the second quarter. He also pointed to differences across business verticals and lower monetization in AI Mode. Schindler said ad experiments in AI Mode had shown promising results and that Alphabet was scaling them, including in international markets. EconoTimes previously examined how AI Mode monetization came into focus after Alphabet’s results.
Chief Financial Officer Anat Ashkenazi said Alphabet expects capital spending to rise significantly in 2027 and plans to provide more detail at its fourth-quarter earnings call.
