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Alphabet stocks slide after earnings miss: 7 key takeaways

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In short

Alphabet's third-quarter revenue grew 25% year-over-year to $127.6 billion, yet fell short of Wall Street's $128.2 billion target. Advertising revenue missed projections by roughly $1.4 billion, even as Search and YouTube recorded single- and double-digit percentage gains. Massive spending on data centres and computing infrastructure resulted in an unexpected negative free cash flow of $9.1 billion.

Key points

  • Disappointing ad growth and high capital costs caused the company's shares to tumble over…: Disappointing ad growth and high capital costs caused the company's shares to tumble over 10% in extended trading.
  • Massive outlays on data centres and computing infrastructure pushed free cash flow down t…: Massive outlays on data centres and computing infrastructure pushed free cash flow down to negative $9.1 billion.
  • Planned capital expenditures reaching up to $205 billion by 2026 continue to raise concer…: Planned capital expenditures reaching up to $205 billion by 2026 continue to raise concerns regarding long-term profitability.

Sources checked by our analysis pipeline: 1

Alphabet shares plunge after earnings disappointment

Alphabet shares slumped more than 10% in extended trading on October 28 after the Google parent reported weaker-than-expected quarterly results. Investors focused on slowing advertising growth, disappointing earnings and mounting costs associated with its artificial intelligence expansion. The sell-off highlighted concerns over whether the company's AI investments can deliver sufficient financial returns. (Sources: CNBC, The Wall Street Journal, Reuters)

AP

2/7

Revenue misses estimates despite 25% growth

Alphabet reported third-quarter revenue of $127.6 billion, up 25% from a year earlier but below Wall Street's estimate of $128.2 billion, according to Reuters. The shortfall showed that strong growth across its business was not enough to satisfy investors, who had been expecting more from the technology giant amid a global boom in AI-related spending.

Reuters

3/7

Advertising weakness weighs on Google's results

Google's advertising business emerged as a key concern after revenue from ads reached approximately $82 billion, missing analyst expectations by around $1.4 billion. Search and other advertising revenue rose 12% year on year to $63.3 billion, while YouTube advertising revenue increased 9% to $11.2…

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