Alphabet's third-quarter net profit dropped 25 percent to $26.2 billion as advertising revenue deceleration across core platforms counterbalanced a doubling of Google Cloud revenue. To sustain its competitive edge in artificial intelligence, the company doubled its quarterly capital expenditures to $51.4 billion, which triggered a negative free cash flow of $9.1 billion. In response to these heavy infrastructure investments, Alphabet raised $41.1 billion through bond sales and new share issuances. Meanwhile, the company's autonomous driving subsidiary, Waymo, reached an operational milestone by exceeding 500,000 weekly paid rides.
Key points
Alphabet raised $41.1 billion through bond sales and share issuances to cover expanding d…: Alphabet raised $41.1 billion through bond sales and share issuances to cover expanding data center and processor outlays.
High-profile artificial intelligence companies including Anthropic and OpenAI are driving…: High-profile artificial intelligence companies including Anthropic and OpenAI are driving substantial demand for Alphabet's proprietary TPU chips.
Heavy capital deployment will continue as Alphabet projects annual capital expenditures w…: Heavy capital deployment will continue as Alphabet projects annual capital expenditures will reach up to $205 billion by 2026.
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Net profit slid 25 percent from a year earlier to $26.2 billion in the July to September period, or $2.12 per share, well short of expectations by analysts surveyed by FactSet.
Alphabet booked an $8.7 billion loss on its equity investments, which includes a large stake in SpaceX.
Revenue rose 25 percent to $127.6 billion, slightly below the roughly $128 billion analysts had forecast.
Advertising revenue grew 11 percent to $82.0 billion, short of expectations. Revenue from Google's search business, still the company's largest source of income, rose 12 percent to $63.4 billion, slowing from 17 percent growth in the previous quarter.
YouTube, now the most-watched outlet on American TV screens, saw advertising revenue grow nine percent to $11.2 billion, down from 13 percent growth in the previous quarter. YouTube Music and Premium passed 150 million subscribers worldwide, including trials.
Google Cloud, which rents computing power and AI tools to businesses, saw revenue jump 103 percent to $30.7 billion, ahead of analyst expectations.
The company said sales of its in-house AI chips, known as TPUs, contributed significantly to that growth.…
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