Alphabet shares were down about 13% at 9:35 a.m. EDT (13:35 UTC) on Oct. 29, as its third-quarter results renewed scrutiny of AI spending and how well AI Mode can monetize searches.
Bloomberg reported the shares were at $281.37 at that time, putting the company’s market-value loss at $511 billion, a record for Alphabet. Benzinga reported a larger loss for Nvidia, which shed $593 billion in market value on Jan. 27, 2025.
Alphabet reported $127.577 billion in revenue for the quarter ended Sept. 30, up 25% from a year earlier. Google Search and other revenue rose 12% to $63.350 billion, while YouTube advertising revenue increased 9% to $11.207 billion. The Associated Press reported that both advertising gains were below some analysts’ expectations. Alphabet said Search queries grew at their fastest year-over-year pace in five years.
CEO Sundar Pichai credited AI investment for growth in overall Search queries, including commercial queries. Google Chief Business Officer Philipp Schindler said on the earnings call that growing query volume in AI Mode affected results because the feature had “lower monetization.”
Google Cloud provided a stronger result: revenue more than doubled to $30.709 billion, and operating income reached $11.121 billion. Alphabet credited enterprise demand for AI infrastructure and solutions, along with sales of its TPU systems.
Alphabet spent $51.355 billion on property and equipment during the quarter. Free cash flow, which the company defines as operating cash flow less capital expenditures, was negative $9.065 billion, after a negative $5.855 billion in the second quarter. The second straight quarter of negative free cash flow extends a trend in Alphabet’s spending.
Alphabet’s Form 10-Q reported that, as of Sept. 30, the company had $924.4 billion in material purchase commitments, including $802.1 billion in multiyear commitments. It also listed $130.5 billion in future payments for leases not yet started and $21.9 billion in future investment funding. Those categories total $1.0768 trillion; Alphabet said the commitments are off balance sheet and depend on counterparties performing.
Alphabet kept its 2026 capital expenditure guidance at $195 billion to $205 billion. CFO Anat Ashkenazi said spending would increase significantly in 2027, with more detail expected on the fourth-quarter earnings call.
