Alphabet Q3 Results: Google Cloud Growth Offset by Heavy AI Spending and Investment Losses
Alphabet reported third-quarter results that initially triggered a stock decline due to earnings and revenue missing estimates. A significant portion of the earnings miss was attributed to an $8.7 billion unrealized paper loss on equity securities, primarily driven by fluctuations in Alphabet's investment in SpaceX. Despite this, operating income excluding investment volatility rose 30% to $40.6 billion. Google Cloud emerged as a major growth driver, with revenue more than doubling to $30.7 billion and operating income reaching $11.1 billion. The cloud division's backlog has reached a massive $561 billion, providing significant long-term visibility. However, investor concerns persist regarding Alphabet's aggressive capital expenditure on AI infrastructure, which resulted in negative free cash flow of $9.1 billion this quarter and forecasts of even higher spending through 2027.
Topics: AI Spending Alphabet Q3 Earnings Google Cloud Revenue SpaceX Investment Loss
Read the full article at Motley Fool
Part of the story Alphabet's Cloud Growth and Diversification Offer Value Amid Search Deceleration (5 articles)