Investors turn on Google owner Alphabet after profit miss, ad slowdown and high spending
Summary
Alphabet shares fell more than 10% in after-hours trading after the company reported quarterly profit and advertising revenue below analyst expectations. Revenue grew 25%, led in part by strong Google Cloud growth, while Alphabet sharply increased AI and data-center spending and forecast higher capital expenditures in 2026 and 2027.Key Facts
- Alphabet reported net profit of $26.2bn, down 25% from a year earlier, or $2.12 per share.
- Revenue rose 25% to $127.6bn, slightly below analysts’ forecast of about $128bn.
- Advertising revenue grew 11% to $82bn; search revenue rose 12% to $63.4bn, and YouTube ad revenue grew 9% to $11.2bn.
- Google Cloud revenue jumped 103% to $30.7bn, while its operating income tripled to $11.1bn.
- Alphabet spent $51.4bn on capital expenditures in the quarter, more than double the $24bn spent a year earlier.
- Alphabet forecast capital expenditures of $195bn to $205bn for 2026 and said spending would rise significantly in 2027.
- The company reported an $8.7bn loss on equity investments, which it attributed to its stake in SpaceX.
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