Alphabet stock falls after Q3 earnings miss as AI spending drives cash burn

Alphabet shares fell more than 10% in extended trading Wednesday after the Google parent reported third-quarter results that missed Wall Street’s revenue and profit estimates and showed a deeper cash burn from its artificial intelligence buildout, according to CNBC and Reuters. It was the company’s first miss on both lines in nearly four years, CNBC reported.

What were Alphabet’s Q3 2026 earnings?

In its release, Alphabet said revenue rose 25% from a year earlier to $127.6 billion. Net income was $26.2 billion, or $2.12 per share, down from $34.98 billion, or $2.87 per share, a year ago. Operating income rose 30% to $40.6 billion.

Analysts polled by LSEG had expected $128.22 billion in revenue and adjusted earnings of $3.02 per share; Alphabet reported adjusted earnings of $2.67, CNBC said. Reuters reported the revenue shortfall came from Google’s core advertising business, which brought in $82.01 billion, about $1.41 billion below expectations.

Why is Google stock down?

The biggest worry was cash. Alphabet reported negative free cash flow of $9.07 billion, far worse than the roughly $2.7 billion analysts expected, according to CNBC. Reuters noted it was a larger burn than the $5.9 billion in the prior quarter, which had been the first negative quarter in the company’s 22 years as a public company.

Capital spending reached $51.36 billion in the quarter, CNBC said. Alphabet kept its full-year forecast of $195 billion to $205 billion, and Chief Financial Officer Anat Ashkenazi said spending would “increase significantly in 2027.” CNBC reported annual capex is expected to exceed $300 billion next year. Reuters said Ashkenazi also flagged near-term margin pressure from renting third-party cloud capacity.

What went right for Alphabet?

Google Cloud was the standout. Cloud revenue more than doubled, up 103% to $30.7 billion, which the company credited to demand for AI infrastructure and its TPU chips. CEO Sundar Pichai said the company is “now on a half-trillion dollar revenue run rate” and that the Gemini app has reached one billion users. Earlier Wednesday, Google announced its Gemini 4 Carbon model, which Reuters described as an effort to counter the perception it had fallen behind in AI.

What does this mean for Microsoft stock and other AI names?

Microsoft also reported quarterly results Wednesday, and investors were watching both companies for signs that heavy AI spending is paying off. CNBC called Alphabet’s cash drop “a worrying sign for the artificial intelligence trade.” This post covers Alphabet’s numbers only; see Microsoft’s release for its results. Nothing here is investment advice.

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