Markets
Alphabet’s profit miss follows its AI spending surge
Alphabet’s third-quarter profit fell 25% to $26.2 billion, while revenue rose 25% to $127.6 billion. Advertising growth slowed, including in search and YouTube, as the company spent $51.4 billion on capital projects, mostly data centers and AI chips. Google Cloud revenue more than doubled, helped by its own chips, but spending exceeded operating cash flow for a second quarter. Shares fell sharply.
Editorial summary · Publisher article
What matters
- Advertising revenue grew 11% to $82 billion, while search revenue growth slowed to 12%.
- Google Cloud revenue rose 103% to $30.7 billion and operating income tripled to $11.1 billion.
- Alphabet raised $28.7 billion through bonds and $12.4 billion through new shares to fund its AI ambitions.
- The company expects 2026 capital spending of $195 billion to $205 billion and says spending will rise significantly in 2027.
Cloud strength versus consumer slowdown
The quarter showed a widening contrast inside Alphabet: cloud and AI-chip demand accelerated while advertising growth softened across search and YouTube.
Context & caveats
- The article reports company figures and analyst comparisons; it does not independently assess whether the AI spending will produce adequate returns.
Why this made the edition
Detailed earnings coverage documents weaker profit and advertising growth alongside sharply higher AI investment, cloud growth, financing and market consequences.
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