Alphabet's share price fell in after-hours trading following the release of its July-September results. EPS and revenue came in below market expectations, while Google Cloud posted substantial revenue growth.
Selling intensified in Alphabet's after-hours trading. EPS was $2.12 versus an estimate of $2.99, while revenue was $127.58 billion, below expectations. A slowdown in Google Services and advertising revenue was noted, and revenue from the core search business also fell short of market expectations.
Google Cloud, however, posted substantial revenue growth of approximately 103%. Although some weakness in demand was seen in parts of the advertising and search businesses, the cloud division performed strongly.
Following the results, concerns intensified that the returns from massive AI investment spending were insufficient. Alphabet is accelerating its AI infrastructure investment, but concerns about the business remaining in the red persist.
In addition, valuation losses on securities held by the company weighed on earnings, while net income declined due to the reversal of special gains recorded in the April-June quarter. The company also indicated that capital expenditure in 2024 is expected to reach up to $205 billion.