Alphabet, the parent company of Google, saw its stock fall about 10% in premarket trading on October 29, 2026. The sharp drop came after the company released its third-quarter earnings report, which raised concerns about advertising growth, profits, and the rising cost of artificial intelligence (AI). The fall could become Alphabet’s biggest post-earnings drop since it became a public company in 2004.
Why Did Alphabet Stock Fall?
One major reason was that Alphabet’s financial results fell short of market expectations. The company reported revenue of $127.6 billion for the third quarter, slightly below what analysts had expected.
Its earnings per share were $2.12, also below forecasts. This means the company made less profit per share than many investors had hoped.
Advertising is another concern. Google earns a large share of its revenue from online ads, especially through its search engine and YouTube. Search advertising revenue grew 12%, but the results were weaker than expected. Investors are also watching how AI-powered search features could change the way people use Google and how the company earns money from ads.
Rising AI Costs Worry Investors
Alphabet is spending heavily on AI technology, computer systems, data centres, and cloud services. These investments could help the company compete with rivals and develop new products.
However, the costs are putting pressure on its cash flow. Alphabet reported negative free cash flow of around $9.1 billion for the quarter. In simple terms, its spending on major investments was greater than the cash left after its operating needs and capital spending.
Investors are concerned that these high costs may continue to rise before the company sees enough financial returns.
Google Cloud Shows Strong Growth
Despite the disappointing results, not every part of Alphabet’s business struggled. Google Cloud revenue more than doubled to approximately $30.7 billion, helped by strong demand for AI services and cloud computing.
This growth shows that Alphabet still has opportunities in the growing AI market. However, investors want to see whether this success can balance the costs and slower-than-expected advertising growth.
The stock’s sharp fall highlights a key issue for major technology companies: investing in AI is expensive, and investors want to see clear results.
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