Alphabet’s Google Cloud revenue doubles to $31 billion as cash flow stays deep red

Alphabet's Google Cloud revenue more than doubled to $30.7 billion in the third quarter, offering a glimmer of hope amidst sluggish growth in other areas of the company. However, the strong performance in Google Cloud was not enough to satiate investors as Alphabet's stock price plummeted more than 11% in after-hours trading following the release of quarterly results.

The drop erased over $280 billion in market value, according to Aptus Capital Advisors head of equity and portfolio manager David Wagner, who noted that everything else was a problem for investors. Although Google Cloud did well, concerns about Google Search's sluggish growth and the potential impact of AI on the franchise weighed heavily on investor sentiment.

Google Search revenue rose 12% to $63.4 billion, falling short of the 15% growth analysts had anticipated. Despite the mixed outlook, Alphabet reported an impressive third-quarter revenue of $127.6 billion, up 25% from the previous year, aligning with expectations. The company's CEO, Sundar Pichai, expressed optimism about the company's growth trajectory, citing its "full stack" approach.

However, operating income dipped slightly to $40.6 billion, and Alphabet's capital spending reached $51.4 billion in the quarter, up from $24 billion a year ago. While Alphabet raised $84.8 billion in equity in June to fuel its AI initiatives, the company's free cash flow turned negative at $9.1 billion, a stark contrast to the negative $5.9 billion in the previous quarter.