Google Cloud doubles, but Alphabet misses forecasts
Alphabet's revenue rose 25% to $127.6 billion and its cloud unit more than doubled, but results missed Wall Street estimates and heavy AI spending pushed cash flow negative.
Google's parent company, Alphabet, reported third-quarter revenue of $127.6 billion on Wednesday, up 25% from a year earlier. Even so, the results came in slightly below analysts' expectations, and the company's shares fell sharply in after-hours trading.
The bright spot was Google Cloud. Its revenue more than doubled to about $30.7 billion, beating forecasts, as businesses and AI companies bought more computing power and Google's own AI chips. The company said demand is so strong it is working to bring more capacity online.
The weaker parts were advertising and profit. Google's ad revenue of about $82 billion fell short of estimates, and earnings per share also missed. Net income dropped to $26.2 billion from about $35 billion a year earlier.
Investors were also focused on spending. Alphabet is pouring money into data centers and AI research, and its free cash flow turned negative for the quarter, at about minus $9 billion. The company said its capital spending will rise significantly again next year.
The results show the tension facing big tech firms: AI is driving fast growth in some businesses, but the cost of building it is rising even faster for now.
This summary is original reporting by tehworldnews, written after checking the facts against several major international news outlets and official statements.