Alphabet Q3 Results Show Strong Cloud Growth Amidst Capital Expenditure Concerns
Alphabet Inc. reported robust third-quarter results, highlighted by a massive 103% surge in Google Cloud revenue to $30.7 billion and an expanded operating margin of 36.2%. While Search revenue grew 12% to $63.3 billion, the rate of growth decelerated slightly due to lower monetization from AI Mode compared to the previous quarter. Despite strong operational performance and $42.3 billion in operating cash flow, Alphabet's quarterly free cash flow turned negative as capital expenditures reached $51.4 billion. This heavy investment reflects the company's aggressive push into AI infrastructure and TPU adoption. The market reaction has led to questions regarding valuation. While current levels present a base-case target of $300, analysts suggest that accelerating Cloud momentum and hardware integration could support a bull-case valuation as high as $420.
Topics: Alphabet Q3 earnings Capital expenditure Free cash flow Google Cloud revenue growth Search revenue deceleration
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Part of the story Alphabet's Q3 Earnings Focus Shifts to Operating Cash Flow Amid High AI Capex (4 articles)