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- October 30, 202619°
- BIST10011,165+0.13%
- USD49.79+0.05%
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- INTEREST36.00%-1.00
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- October 30, 202619°
Alphabet shares tumble 10% as search growth slows in shift toward AI
Alphabet's stock fell about 10% in extended trading after the Google parent missed earnings estimates, with search revenue growth slowing to 12% and free cash flow sinking to negative $9 billion.
Shares of Alphabet fell about 10% in extended trading on Wednesday after the Google parent reported an across-the-board earnings miss, with its core search business drawing the most attention.
Revenue in the search and other segment grew 12% from a year earlier to roughly $63 billion, but came in below estimates for the second straight quarter. Growth in the segment has slowed from 19% in the first quarter to 17% in the second and 12% in the third.
At the same time, Google said search query growth was the strongest it had been in five years, a gap between usage and revenue that analysts linked to more people turning to AI chatbots and agents, including Google's own tools. Alphabet executives said foreign exchange was the biggest factor behind the slowdown and that the currency impact would be even greater in the fourth quarter.
The company also reported negative free cash flow of $9 billion for the quarter, about three times the deficit analysts expected, as it continues to pour money into AI infrastructure. In the second quarter, Alphabet's free cash flow turned negative for the first time in its history as a public company, at $5.9 billion.
Chief Business Officer Philipp Schindler said the company was accelerating the deployment of Gemini models across its ads infrastructure, adding that Gemini helped advertisers generate more than 1.5 billion campaign assets in the quarter, more than seven times as many as a year earlier.
Analysts at UBS wrote that the results are "going to bring Search cannibalization fears right back to the forefront."
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