Revenue Growth but Results Below Expectations
Alphabet, the company that controls Google, closed the third quarter with revenue up 25% year on year, at $127.577 billion, according to what was reported by ETNews. The figure nevertheless remains below the $128.2 billion expected by the market. Net income fell to $26.17 billion, down 25% from the previous year, and diluted earnings per share stood at $2.12 against the $3.02 expected. In contrast, operating income rose 30% to $40.576 billion.
Cloud and AI Drive Growth, Advertising Disappoints
The growth engine was the cloud division: Google Cloud revenue reached $30.71 billion, more than doubled compared with a year earlier. According to the company, the result reflects strong demand for enterprise infrastructure and artificial intelligence solutions and sales of systems based on the Tensor Processing Unit, the AI chip developed in-house. CEO Sundar Pichai attributed the cloud's 103% jump precisely to this demand and spoke of strong customer interest in TPU systems.
Weighing on the results, by contrast, was the core advertising business: Google Ads revenue grew by about 11% to $82.01 billion, but came in about $1.41 billion below expectations. This is the main explanation given for the failure to meet overall forecasts.
The Burden of AI Investments
The critical point is the financial dynamics linked to investments. Free cash flow for the quarter was negative at $90.7 billion, worsening from -$59 billion in the previous quarter, while the market expected substantial balance. At the level of the parent company's activities, where common costs including AI research and development are consolidated, an operating loss of $7.66 billion was recorded.
The pressure is set to continue: CFO Anat Ashkenazi forecast a substantial increase in capital expenditures in 2027 and cited possible short-term pressure on profitability linked to the use of external cloud infrastructure. After the results were published, the stock lost nearly 10% in after-hours trading in the United States.
What remains to be verified
The picture that emerges is that of a group growing thanks to cloud and AI but with a rising financial cost: the market, according to ETNews, is looking above all at the impact of AI infrastructure investments on the strength of cash flows. Still to be clarified, because they are not indicated in the material, are the detailed breakdown of spending and the payback periods of the announced investments, as well as precise indications on the 2027 guidance, formulated only in terms of a significant increase.
