Alphabet Drops 10% on Cash Flow Miss — SkimNews
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- Alphabet fell 10% in premarket trading on Thursday, putting it on track for its largest post-earnings drop since its 2004 IPO, following weaker-than-expected financial results.
- Alphabet reported negative free cash flow of $9.07 billion in Q3, significantly worse than the $2.70 billion analysts expected, while maintaining its $195B–$205B full-year capex guidance.
- Microsoft saw its stock rise nearly 4% in premarket trade after reporting $45.2B in capital expenditures and leases, below projections but with still-positive $18.63B free cash flow.
- Alphabet's search advertising revenue grew 12% to $63.35B in Q3 but missed analyst forecasts, with Chief Business Officer Philipp Schindler citing lower monetization in AI Mode as a drag.
- Google's AI Overviews and AI Mode are now being scaled with ads internationally, as the company works to monetize its AI products amid rising competition from ChatGPT and Claude.
- Ben Barringer of Quilter Cheviot described Alphabet's earnings as a 'messy set of results' with a poorly handled call, contrasting it with Microsoft's 'measured' AI infrastructure rollout.
Why it matters: Alphabet’s market value dropped tens of billions in early trading because investors expected tighter cost control amid heavy AI spending, but instead got deteriorating cash flow and weak ad performance—undermining confidence in its ability to compete with Microsoft in AI while protecting its core search business.
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