Alphabet, the parent company of Google, saw its shares fall more than 10% in after‑hours trading on Wednesday after disclosing quarterly results that missed analyst expectations and highlighted a cooling advertising market alongside robust AI investment.
Results for the quarter showed net profit of $26.2 billion, or $2.12 a share, down 25% from the same period a year earlier and below estimates compiled by FactSet. Revenue, however, increased to $127.6 billion for the July‑to‑September period.
The company’s advertising business — a key driver of revenue — showed signs of slowing, a concern for investors who have come to rely on ad sales for the bulk of Alphabet’s earnings. At the same time the firm continued to prioritise substantial spending on artificial intelligence development and related infrastructure.
Investors reacted sharply to the combination of weaker profit, an advertising slowdown and sustained expenditure on AI projects, erasing tens of billions of dollars of market value from the roughly $4 trillion technology group. The after‑hours selloff reflected market sensitivity to profit surprises and the costs of pivoting toward new technologies.
While the quarter produced higher overall revenue, the gap between expectations and reported profit, together with the outlook for advertising and continued investment needs, has heightened scrutiny of Alphabet’s near‑term profitability and capital allocation as it balances revenue growth against heavy AI spending.