Alphabet shares fell 7%: revenue and earnings came in below expectations
The substantial capital expenditures on artificial intelligence development have not yet yielded the expected financial returns for the company
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Google's parent company, Alphabet, disappointed investors with its third-quarter earnings report: its revenue and profits fell short of analysts' expectations. This suggests that the company’s massive investments in artificial intelligence are not yet yielding sufficient returns, according to Bloomberg.
Details
Alphabet's revenue, excluding affiliate payments, for the three months ended September 30 was $111.2 billion. Analysts had forecast an average of $111.3 billion.
Earnings per share came in at $2.12, compared with the expected $2.99.
Following the release of the report, Alphabet's stock fell 7.7% in after-hours trading in New York.
Context
The aggressive expansion of its AI infrastructure has pushed Alphabet’s capital expenditures to record levels, according to Bloomberg. These investments have helped the company become one of the leading providers of computing power for AI developers, including Anthropic and Meta Platforms. At the same time, Google has been developing its own AI models and integrating them into its mass-market services—Search, YouTube, and Gmail—but so far, these efforts have not justified the scale of the expenditures.
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