Alphabet posts negative free cash flow of $9.07 billion as shares slump more than 8%

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Alphabet posts negative free cash flow of $9.07 billion as shares slump more than 8%
PrimeXBT Editorial Team
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Alphabet reported negative free cash flow of $9.07 billion for the third quarter, and its shares slumped more than 8%. Revenue and earnings missed analyst estimates, even as Google Cloud revenue more than doubled and the Gemini app reached 1 billion users.

Alphabet shares slumped more than 8% after the company reported a drop in free cash flow during the third quarter. The search giant posted negative free cash flow of $9.07 billion, far below the $2.70 billion analysts expected.

Questions are mounting over heightened spending on the AI buildout. Capital expenditures totaled $51.36 billion, short of the $55.09 billion analysts expected.

Earnings and revenue miss estimates

On the headline numbers, Alphabet reported adjusted $2.67 earnings per share against $3.02 expected, according to analysts polled by LSEG. Revenue of $127.58 billion also fell short of the $128.22 billion estimate, though it grew 25% from a year ago.

Net income fell to $26.17 billion, or $2.12 per share, from $34.98 billion a year earlier. Operating income totaled $40.58 billion, missing a $43.19 billion forecast from FactSet.

Search revenue grew 12% to $63.35 billion, below a $64.96 billion estimate.

Cloud revenue more than doubles and Gemini reaches 1 billion users

CNBC reports the spending contributed to strong revenue growth in Cloud. Cloud revenue more than doubled to $30.7 billion, above the $28.7 billion analysts expected.

Google said its Gemini app reached 1 billion users. CEO Sundar Pichai told analysts the company is already seeing strong demand for its recently launched Argon Gemini model.

Trailing free cash flow falls 73% as capex guidance rises

Crypto Briefing reports that trailing 12-month free cash flow fell 73% year over year to $19.75 billion for the period ended September 30, 2026. Crypto Briefing attributes the decline to the company's spending on AI infrastructure.

During the second quarter, Alphabet lifted its full-year forecast for capital expenditures to between $195 billion and $205 billion, up from prior guidance of as much as $190 billion. CNBC reports that annual capex is expected to top $200 billion before exceeding $300 billion in 2027.

Sources: CNBC, Crypto Briefing

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