Alphabet falls more than 10% after hours despite 25% revenue growth to $127.58 billion
Key Facts
Alphabet shares fell more than 10% to $289.95 in after-hours trading on October 28, after the company reported revenue of $127.58 billion for the quarter ended September 30, up 25% from the same period a year earlier. Revenue came in below analysts’ average estimate of $127.97 billion, according to a FactSet survey cited by The Associated Press. Before the results were released, the stock closed the regular session at $324.89, compared with $320.58 the previous day, according to EL7 data. The $289.95 price reflects after-hours trading, not the regular-session close. The results highlight a divergence between accelerating revenue growth and rising cloud activity on one hand, and falling earnings and pressure from expected spending on the other.
The quarter marked Alphabet’s 13th consecutive period of double-digit year-over-year revenue growth, according to the company’s filing. Revenue was $127.577 billion in the third quarter of 2026, compared with $102.346 billion a year earlier, and the annual growth rate accelerated to 25% from 16%. Even so, the total fell short of the average estimate, coming in below the $127.97 billion analysts expected in the FactSet survey. The gap shows that continued strong sales growth was not enough to exceed market revenue expectations. Chief Executive Sundar Pichai said the company had “now reached an annual revenue run rate of half a trillion dollars,” referring to the scale of business at its current revenue pace.
On earnings, net income available to common shareholders fell to $26.170 billion in the third quarter from $34.979 billion in the same period of 2025. The other income and other expense line moved from net income of $12.759 billion a year earlier to a net expense of $8.221 billion in the latest quarter. Chief investment officer David Wagner said that, amid concerns AI could take away from search activity, investors “need to see search accelerating, not decelerating.” That concern puts search performance at the center of how the results are assessed, alongside Alphabet’s expansion of AI infrastructure. The stock fell in after-hours trading despite revenue growth, as net income declined from its year-earlier level.
Google Cloud posted the fastest growth among the operating figures in the results, with revenue rising 103% year over year to $30.7 billion. Pichai said infrastructure and AI solutions were “the primary drivers of cloud growth.” The figures came as the Gemini app reached 1 billion users, which Pichai described as “the fastest-growing product in Google’s history.” These indicators show the expanding reach of the company’s AI-related businesses, through both cloud services and the app. At the same time, investors’ concerns about AI’s effect on search activity remain part of how the company’s results are viewed, Wagner said.
Attention is also turning to the cost of expanding infrastructure. Chief Financial Officer Anat Ashkenazi said Alphabet expects capital spending to “increase significantly” in 2027. The Associated Press reported that she will provide further details on spending during the fourth-quarter earnings call. The forecast makes expected capital spending one of the issues to watch after the third-quarter results, alongside the trajectory of revenue and earnings. Meanwhile, Pichai said the company’s annual revenue run rate had reached half a trillion dollars, while revenue posted year-over-year growth for the 13th consecutive quarter. These indicators come against a backdrop of cloud expansion, which Pichai said is being driven by infrastructure and AI solutions.
The reaction extended to Nasdaq futures, which fell 1% on Thursday, October 29, as concerns about Alphabet’s AI spending continued to weigh, according to Reuters via Investing.com. The move came in the session after the stock fell more than 10% in after-hours trading. Alphabet shares closed the regular session at $324.89 on October 28 before falling to $289.95 in after-hours trading, according to the figures in the sources. The shift reflects a focus on how spending on AI will translate into activity and revenue, amid concerns about the pace of search growth. Ashkenazi is due to provide more details on expected capital spending in 2027 during the fourth-quarter earnings call.