Investors turn on Google owner Alphabet after profit miss, ad slowdown and high spending
Net profit slid 25% from a year earlier to $26.2bn, well short of expectations, though revenue rose to $127.6bn Shares in Google parent Alphabet fell more than 10% in after-hours trading Wednesday, erasing tens of…
Investors turn on Google owner Alphabet after profit miss, ad slowdown and high spending Net profit slid 25% from a year earlier to $26.2bn, well short of expectations, though revenue rose to $127.6bn
Net profit slid 25% from a year earlier to $26.2bn in the July-to-September period, or $2.12 a share, well short of expectations by analysts surveyed by FactSet.
Alphabet booked an $8.7bn loss on its equity investments, which it attributed to its stake in SpaceX, the Elon Musk-led company where shares have struggled since going public in June.
Revenue, however, rose 25% to an enormous $127.6bn. The figure was slightly below the roughly $128bn analysts had forecast.
Google Cloud, which rents computing power and AI tools to businesses, saw revenue jump 103% to $30.7bn, ahead of analyst expectations.
The company said sales of its in-house AI chips, known as TPUs, contributed significantly to that growth. Operating income for the unit tripled to $11.1bn.
Google is also selling its TPU chips to outside companies, in a growing challenge to market leader Nvidia. OpenAI reportedly plans to buy some of the chips.
Alphabet’s “Other Bets” division, which includes robotaxi company Waymo, posted revenue of $372m and an operating loss of $2bn.
Waymo now provides more than 500,000 paid rides per week across 15 US metropolitan areas and aims to reach 1m weekly rides by the end of the year.
Alphabet spent $51.4bn on capital expenditures during the quarter, mostly on datacenters and AI chips, more than double the $24bn a year earlier.
Its latest forecast for capex spending is between $195bn to $205bn in spending for 2026.
The company said it would continue to increase capex spending significantly in 2027.
“I would broadly think of all of this as a long-range planning process, not a short-term allocation exercise,” Sundar Pichai, the Google CEO, told analysts of the company’s investment splurge.
The company’s spending, which included a fine paid to the European Union, outstripped the cash generated by Alphabet’s businesses for a second straight quarter, leaving a $9.1bn gap.
During the quarter Alphabet raised $28.7bn by selling bonds and $12.4bn by issuing new shares to help pay for its AI ambitions.
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- The Guardian29 Oct, 00:39Investors turn on Google owner Alphabet after profit miss, ad slowdown and high spending ↗Figures: 26.2 milliards · 127.6 milliards
| Publisher The Guardian (reference tier) | +82 |
| Checkable figures cited | +3 |
| Detailed summary | +2 |
| Total | 87 |
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