Alphabet’s free cash flow sinks further, Q3 capex expectations miss in worrying sign for AI trade
Alphabet said its capital spending topped $51 billion as cloud revenue jumped 103% and investors questioned whether AI returns can justify the outlay.
- On Thursday, October 29, 2026, Alphabet shares fell about 10% after the company reported third-quarter revenue of $127.6 billion, missing Wall Street expectations.
- Driven by $51.36 billion in capital expenditures, Alphabet reported negative free cash flow of $9.07 billion for the quarter, reflecting the massive resources required to fund its AI infrastructure.
- Chief Business Officer Philipp Schindler noted that while Google Cloud revenue soared 103% to $30.7 billion, AI-mode queries cannibalized traditional search advertising growth, which decelerated to 12%.
- Alphabet maintained its 2026 capital expenditure guidance of $195 billion to $205 billion, while CFO Anat Ashkenazi confirmed spending will "increase significantly" in 2027.
- With Alphabet committing to more than $1 trillion in multi-year spending agreements, sustained infrastructure investment points to a cycle where returns on massive AI investments remain uncertain.
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Optimism about the main technological actions has been slowed down this Thursday. Alphabet, Google’s parent company, has lost about $500 billion in stock market capitalization in a single session. The bass tone in the park has also hurt Wall Street: the Nasdaq technology index plunged 2% into opening.
The Alphabet shares, Google's parent company, dropped by about 13% on Thursday at the start of the Wall Street transactions, after the group reported a negative free cash flow, well above the analysts' estimates, and revenues from the advertising associated with the pending searches, transmits CNBC.
The key indicators on Wall Street declined at the opening of the trades today Thursday, amid renewed concerns about the sharp rise in investment costs in artificial intelligence.
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