Alphabet Reports Third Quarter Earnings Miss Amid High AI Capital Expenditures
Alphabet (GOOGL) reported third-quarter financial results that missed analyst expectations for both revenue and earnings per share. While top-line revenue grew 25% year-over-year to $127.6 billion, earnings per share of $2.12 fell short of the projected $3.02. The company's free cash flow turned negative at approximately $9.1 billion, driven largely by a significant increase in capital expenditures totaling $51.4 billion as the firm invests heavily in artificial intelligence infrastructure. Despite concerns regarding slowing growth in Google Search advertising and YouTube ad revenue, Google Cloud emerged as a major strength, with sales surging over 100% to $30.7 billion, exceeding analyst estimates. Additionally, while net income saw a decline, part of this was attributed to an unrealized loss on Alphabet's equity position in SpaceX rather than purely operational weakness.
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