Google Stock Plunges More Than 10% After Alphabet’s Earnings Disappoint Investors

Shares of Alphabet Inc. (NASDAQ: GOOGL), Google’s parent company, plunged more than 10% in after-hours trading on Wednesday, October 28, after the technology giant reported disappointing third-quarter earnings despite strong revenue growth and booming demand for artificial intelligence services.

Alphabet’s stock closed the regular trading session at $324.89, up 1.34%, before falling to approximately $289 in extended trading following the earnings announcement. The sharp decline reflected investor concerns over slowing advertising growth, rising AI infrastructure costs, and weaker-than-expected profitability. (Yahoo! Finance)

Revenue rises, but profits fall

Alphabet reported third-quarter revenue of $127.6 billion, representing a 25% increase compared with the same period in 2025. However, the figure fell slightly below Wall Street expectations, while net income declined approximately 25% to $26.2 billion.

The company reported earnings of $2.12 per share, affected partly by losses on equity investments. These results raised questions about whether Alphabet’s rapidly expanding investments in artificial intelligence will deliver sufficient returns to shareholders. (Alphabet Q3 2026 financial results (SEC))

Google’s core advertising business also showed signs of slower expansion. Search and related advertising revenue increased 12% to $63.3 billion, while YouTube advertising revenue grew approximately 9% to $11.2 billion. Although both businesses continued to expand, their performance disappointed some market analysts.

Google Cloud emerges as a major growth driver

One of the strongest aspects of Alphabet’s quarterly results was the performance of Google Cloud, whose revenue surged 103% year over year to a record $30.7 billion.

The impressive growth was driven by accelerating demand for AI computing infrastructure, enterprise AI applications, and Google’s specialized Tensor Processing Units (TPUs).

Alphabet CEO Sundar Pichai emphasized the company’s progress in artificial intelligence, noting that the Gemini application had reached one billion users. (Associated Press)

However, investors remain concerned about the enormous financial resources required to sustain this expansion.

AI spending worries investors

Alphabet reported negative free cash flow of approximately $9.1 billion for the quarter as it continued investing heavily in data centers, computing capacity, and AI infrastructure.

Chief Financial Officer Anat Ashkenazi indicated that capital expenditures are expected to increase significantly in 2027, reinforcing concerns about potential pressure on profitability and cash generation. (Reuters)

The market reaction illustrates a growing challenge for major technology companies: investors increasingly expect not only rapid AI-driven revenue growth but also evidence that substantial infrastructure investments can generate sustainable profits.

What comes next for Google stock?

The sharp decline places renewed attention on Alphabet’s financial outlook and its ability to balance artificial intelligence expansion with profitability.

Investors will closely monitor Google’s advertising revenue, cloud margins, capital expenditures, and free cash flow in the coming quarters.

Despite the negative market reaction, Alphabet remains a major force in global technology, supported by its search engine, YouTube, Android ecosystem, cloud computing services, and expanding AI capabilities.

The central question for investors is whether Alphabet’s accelerating AI revenue can eventually justify the enormous investments required to compete in the rapidly evolving artificial intelligence market.

The next regular US trading session, on October 29, will offer a clearer indication of how investors assess the company’s long-term prospects following its earnings announcement.