Alphabet Q3 Revenue and Earnings Miss Estimates; Stock Falls 10% After Hours on Surging AI Capex

Alphabet (GOOGL) shares plunged more than 10% after hours Wednesday after the company posted third-quarter revenue and earnings below analyst expectations and signaled a sharp increase in AI capital spending for 2027. The company reported negative free cash flow of $9.07 billion, well below the $2.7 billion deficit analysts expected. Revenue for the quarter ended Sept. 30 came in at $127.58 billion versus $128.22 billion expected, with adjusted EPS of $2.67 versus $3.02. Advertising revenue totaled $82 billion, missing the $83.6 billion estimate, while search revenue rose 12% to $63.35 billion, below the $64.96 billion forecast. Google Cloud revenue more than doubled to $30.7 billion, topping the $29.1 billion estimate. Alphabet said AI Mode queries carry lower monetization and have weighed on search revenue growth. Capital expenditures reached $51.36 billion in the quarter, below the $55.09 billion expected. Alphabet reiterated full-year capex guidance of $195 billion to $205 billion and said 2027 capex will exceed $300 billion. An $8.66 billion loss on equity investments, versus a $99.03 billion gain in the prior quarter tied to SpaceX and Anthropic stakes, also weighed on earnings.