Alphabet shares fall after revenue miss, cash burn worsens

Alphabet's shares plummeted more than 10 percent in after-hours trading after the tech giant missed Wall Street's profit and revenue projections on Wednesday (Oct 28). The company reported negative free cash flow of US$9.07 billion, a stark increase from the US$5.9 billion reported in the previous quarter. This cash burn surge was primarily driven by investments in cloud capacity and AI research.

Alphabet's revenue for the third quarter totaled US$127.6 billion, falling short of the estimated US$128.2 billion. The shortfall was largely attributed to Google's advertising business, which generated US$82.01 billion in revenue, about US$1.41 billion less than expected. Despite Google Cloud's revenue exceeding analyst estimates and more than doubling to US$30.71 billion, it was not sufficient to offset the decline in advertising revenue.

The company's operating income loss in "Alphabet-level activities" stood at US$7.66 billion, largely due to AI research and development expenses. CEO Sundar Pichai attempted to alleviate concerns by unveiling the new Gemini 4 Carbon model, emphasizing Alphabet's continued leadership in the AI race.