Alphabet shares fell sharply in premarket trading on Thursday, down 10%, while Microsoft was up nearly 4%. The decline comes as investors assess the technology giant’s latest spending and free cash flow figures, reported in its third-quarter earnings.
In the Q3 earnings statement, Google and Alphabet CEO Sundar Pichai told investors:
“We had a strong quarter and are now on a half-trillion dollar revenue run rate. Our deep full stack approach is driving momentum across the business, with Alphabet revenues growing 25% year-over year. Our AI investments are driving overall Search query growth, including commercial queries. In fact, our year-over-year query growth rate is the highest it’s been in the last five years.”
“Google Cloud revenues grew 103%, powered by huge demand for our AI infrastructure and AI solutions. We’re also seeing strong demand for our TPU systems across a wide range of customers. Gemini 4 Argon and Carbon are now leading at the frontier. Overall, our first-party model APIs are now processing nearly 32 billion tokens per minute, more than four times what we processed a year ago. On top of that, the Gemini app has reached one billion users—making it the fastest-growing product in Google’s history—and we surpassed 150 million YouTube Music and Premium subscribers globally, including trials. We’re excited by the range of big opportunities ahead of us.”
Alphabet’s biggest source of revenue, search advertising, grew 12% in the September quarter to $63.35 billion, but missed analyst expectations.
Microsoft reported $45.2 billion in capital expenditures and finance leases in the third quarter, up 30% from the prior year. Alphabet, in contrast, reported negative free cash flow of $9.07 billion for Q3.
The earnings report comes as investors scrutinize technology companies’ plans for AI spending.
If Alphabet closes down more than 9.77% on Thursday, it would mark the company’s worst-ever post-earnings reaction since it went public in 2004.
By CEO NA Editorial Staff
