Alphabet Shares Drop Following Third-Quarter Earnings Amid Rising AI Capital Expenditures
Alphabet (GOOGL) saw its stock price decline approximately 10% in after-hours trading following its third-quarter results. While total revenue grew 25% year-over-year to $127.6 billion and Google Cloud revenue surged by over 100%, the company faced pressure from declining earnings per share (EPS) and negative free cash flow for the second consecutive quarter. The primary drivers of the financial strain are massive investments in artificial intelligence infrastructure. Capital expenditures rose significantly, contributing to a negative free cash flow of approximately $9.1 billion. Additionally, operating margins have begun to compress as depreciation costs and shared AI research expenses climb. Despite these headwinds, underlying operating income remains strong when excluding non-operational investment swings.
Topics: Alphabet earnings capital expenditure free cash flow Google Cloud revenue