Alphabet Shares Drop 13 Percent Following Third Quarter Report
Alphabet experienced a $500 billion decline in market value due to revenue figures falling short of expectations and a cash flow deficit caused by heavy spending on artificial intelligence infrastructure.
Following the third-quarter financial results announced on October 28, 2026, Alphabet shares fell by approximately 13 percent in trading on the morning of October 29.
The company reported $127.6 billion in total revenue and $40.6 billion in operating profit; however, these figures fell short of analysts' expectations of $128.2 billion. The slowdown in Google Search revenue growth to 12 percent has heightened concerns regarding competition from AI-based chatbots such as ChatGPT and Claude.
Alphabet, which made $51.4 billion in capital expenditures to support AI infrastructure, reported a free cash flow deficit of $9.1 billion. Management announced that it has increased its 2026 capital expenditure budget to between $195 billion and $205 billion, and that it will fund this through a $12.4 billion stock issuance and $28.7 billion in debt.
Despite the selling pressure in the market, strong performance was observed in the Google Cloud division. The cloud unit's revenue increased by 103 percent to reach $30.7 billion. Additionally, it was noted that the use of Google's custom Tensor Processing Units (TPUs) by companies such as Anthropic, Apple, Meta, and Oracle has increased.
Sources
- fool.com · Link