Alphabet shares fall after revenue miss, cash burn worsens

Alphabet's shares dropped 8% in extended trading after missing Wall Street's revenue expectations on Wednesday. The tech giant reported a revenue of $127.6 billion for the third quarter, falling short of analysts' estimate of $128.2 billion. The core advertising business generated $82.01 billion, $1.41 billion less than expected.

While Google Cloud outperformed with $30.71 billion in revenue, it wasn't enough to offset the ad-side performance. Alphabet's total cash burn reached $9.07 billion, a significant increase from $5.9 billion in the previous quarter, marking the first time the company went into negative cash flow in its 22-year history. The decline in revenue and cash burn was primarily due to heavy investments in AI research and development, aimed at boosting cloud capacity.

Despite the setback, Alphabet remains a key beneficiary of the rise in enterprise AI spending, which keeps data center utilization high and pushes cloud providers to accelerate infrastructure deployment.