Alphabet Shares Plunge After Earnings Miss Expectations
Alphabet shares plunged Thursday after third-quarter earnings missed expectations, falling as much as 13.7 percent intraday to $280.36, the largest intraday percentage drop on record for the stock, according to Dow Jones Market Data. The shares traded around $286 in late-morning trading, down about 12 percent from Wednesday's close of $324.89.
The company reported revenue of $127.577 billion for the quarter, up 25 percent from a year earlier but just below the roughly $128.2 billion analysts expected. Google Services revenue rose 11 percent to $96.302 billion, while Search revenue of $63.35 billion and total advertising revenue of $82.0 billion fell short of expectations.
Net income was $26.17 billion, down 25 percent from a year earlier. Diluted earnings per share were $2.12, including an $8.7 billion net loss on equity securities that reduced earnings by $0.55 a share, making the headline figure difficult to compare with the roughly $3.00 analysts had expected on an adjusted basis.
The bright spot was Google Cloud, where revenue more than doubled to $30.709 billion, up 103 percent, with operating income of $11.121 billion. Total operating income rose 30 percent to $40.576 billion, a margin of 31.8 percent.
The spending side drew the harder look. Free cash flow was negative $9.065 billion, the second straight negative quarter, after $51.4 billion of capital spending in the quarter. The company reaffirmed 2026 capital spending guidance of $195 billion to $205 billion. The figures sharpened a question investors have pressed all year: how quickly heavy spending on AI infrastructure turns into profit.
The drop set several markers. The intraday low was the lowest since March 31, 2026, and the shares were down 29.66 percent from their all-time closing high of $402.62 on May 13, 2026. Alphabet was down 17.69 percent in October, on pace for its worst month since April 2022, and was the most actively traded stock in the S and P 500 and the Nasdaq 100. More than 55 million shares had changed hands by mid-morning, nearly double Wednesday's full-day total.
Microsoft, which reported the same day, moved the other way after its earnings, with Azure revenue up 48 percent to $33.2 billion in its first dollar disclosure for the business.
What comes next turns on whether analysts revise their estimates in the coming days, whether Cloud growth offsets softness in advertising, and whether capital spending guidance changes. This article reports market movements and is not investment advice.
