Alphabet Q3 Revenue and EPS Miss Estimates, Shares Fall 9.4% After Hours

Alphabet (GOOGL) reported third-quarter revenue and earnings below analyst expectations on Wednesday, sending shares down 9.4% in after-hours trading. If the decline holds into Thursday's session, it would mark the stock's steepest one-day drop since a 9.5% fall in October 2023. Revenue rose 25% to $127.6 billion, missing the $128 billion consensus, while earnings per share came in at $2.12 versus the expected $3.02. EPS was dragged down by an $8.6 billion equity investment loss tied to the company's stake in SpaceX. Google Cloud was the lone bright spot, with revenue up 103% to $30.71 billion, beating Wall Street's $28.8 billion estimate. However, Google Search revenue grew 12%, slowing from 17% in the second quarter, despite search query growth reaching a five-year high. Capital expenditures on AI infrastructure totaled $51.4 billion, pushing free cash flow to negative $9.1 billion. Analysts flagged concerns over monetizing AI investments and potential competitive threats to Google's core search business from AI agents.