Alphabet (NASDAQ:GOOG) Issues Earnings Results, Misses Estimates By $0.89 EPS

Alphabet (NASDAQ:GOOG) posted its quarterly earnings data on Wednesday. The information services provider reported $2.12 earnings per share for the quarter, missing the consensus estimate of $3.01 by ($0.89), FiscalAI reports. The firm had revenue of $127.58 billion for the quarter, compared to analyst estimates of $127.97 billion. Alphabet had a return on equity of 46.63% and a net margin of 50.03%. The firm’s quarterly revenue was up 24.7% on a year-over-year basis. During the same period in the prior year, the company earned $2.87 earnings per share.

Here are the key takeaways from Alphabet’s conference call:

• Revenue and Cloud growth accelerated: Alphabet’s Q3 revenue rose 25% to $127.6 billion, while Google Cloud revenue more than doubled to $30.7 billion and operating income more than tripled to $11.1 billion. Cloud backlog reached $561 billion, supported by strong demand for AI infrastructure, solutions, and TPU systems.
• AI adoption is expanding across the company: Alphabet said Gemini app users reached 1 billion, first-party model APIs processed nearly 32 billion tokens per minute, and new Gemini models are driving developer, enterprise, Search, advertising, and internal productivity gains. The company is also preparing to expand agentic capabilities across Search, Chrome, Android, Workspace, and consumer products.
• Search monetization is beginning to scale with AI: Search queries grew at their fastest rate in five years, while Alphabet is expanding ads in AI Overviews and AI Mode to more users and international markets. Management characterized AI Mode queries as largely incremental and said early advertising experiments showed promising relevance and advertiser results.
• Heavy AI investment is pressuring cash flow and near-term margins: Q3 capital expenditures reached $51.4 billion, producing negative free cash flow of $9.1 billion, while full-year 2026 CapEx remains projected at $195 billion to $205 billion and is expected to rise significantly in 2027. Cloud margins are also expected to face near-term pressure as Alphabet uses third-party compute capacity to address supply constraints.
• Search growth faces tougher comparisons and external headwinds: Management expects foreign-exchange pressure and difficult year-over-year comparisons from the Search acceleration that began late in 2025 to weigh on Q4 growth. Lower monetization of AI Mode queries also contributed to the disconnect between strong query growth and the pace of Search advertising growth.

Alphabet Trading Down 0.9%

NASDAQ GOOG traded down $2.58 during trading hours on Friday, hitting $279.74. 11,438,282 shares of the company’s stock were exchanged, compared to its average volume of 20,501,998. The firm has a market cap of $3.42 trillion, a price-to-earnings ratio of 14.57, a PEG ratio of 0.92 and a beta of 1.19. The stock has a 50-day simple moving average of $336.93 and a 200 day simple moving average of $338.53. The company has a current ratio of 2.72, a quick ratio of 2.64 and a debt-to-equity ratio of 0.16. Alphabet has a 1-year low of $271.41 and a 1-year high of $404.47.

Analysts Set New Price Targets

Several research analysts have weighed in on the stock. TD Cowen reissued a “buy” rating and issued a $460.00 price target (down from $485.00) on shares of Alphabet in a report on Thursday. Roth Capital raised their price objective on Alphabet from $435.00 to $440.00 and gave the stock a “buy” rating in a research note on Thursday, July 23rd. Weiss Ratings reissued a “buy (b)” rating on shares of Alphabet in a report on Thursday, October 15th. Wolfe Research restated an “outperform” rating on shares of Alphabet in a research report on Thursday, August 27th. Finally, HSBC set a $515.00 price target on Alphabet in a research note on Friday, August 14th. Six research analysts have rated the stock with a Strong Buy rating, thirty-five have issued a Buy rating, five have issued a Hold rating and one has given a Sell rating to the stock. According to data from MarketBeat.com, the stock has an average rating of “Moderate Buy” and an average price target of $413.54.

Insider Activity

In other news, Director Frances Arnold sold 83 shares of the firm’s stock in a transaction dated Wednesday, September 30th. The stock was sold at an average price of $340.45, for a total value of $28,257.35. Following the completion of the sale, the director directly owned 19,076 shares in the company, valued at $6,494,424.20. This trade represents a 0.43% decrease in their position. The sale was disclosed in a filing with the SEC, which is available at this link. 12.99% of the stock is owned by company insiders.

Key Alphabet News

Here are the key news stories impacting Alphabet this week:

• Positive Sentiment: Google Cloud growth remains a major bright spot. Revenue more than doubled year over year to approximately $30.7 billion, operating margins expanded and backlog reached about $561 billion, supporting the argument that Alphabet’s AI infrastructure investments are generating demand. Alphabet’s Cloud Business Just Doubled
• Positive Sentiment: Alphabet is gaining traction in AI hardware and services. Reports said OpenAI plans to purchase Google’s TPUs, while Gemini 4 Carbon received favorable attention and ranked highly in AI testing. Anthropic’s large, multiyear computing commitments could also benefit Google Cloud, although Amazon Web Services is expected to receive the largest share. OpenAI Reportedly Plans to Buy Google’s AI Chips
• Positive Sentiment: Some analysts view the selloff as an opportunity. Goldman Sachs continued to identify Alphabet as a top AI pick, while other bullish commentary cited the company’s valuation, search dominance, cloud backlog and potential TPU revenue. Why Goldman Sachs Still Calls Alphabet a Top AI Pick
• Neutral Sentiment: Waymo and other emerging businesses remain strategic but costly. Waymo is expanding internationally through a Toyota robotaxi partnership, but Alphabet’s Other Bets segment generated limited revenue and more than $2 billion in quarterly operating losses. Waymo Taps Toyota to Supply Robotaxis
• Neutral Sentiment: Several law firms publicized securities class actions and lead-plaintiff deadlines related to alleged disclosures about Alphabet’s Gemini development. These announcements add headline risk but do not establish liability or indicate a financial judgment against the company.
• Negative Sentiment: The quarterly results missed expectations. EPS was $2.12 versus consensus near $3.00, while revenue of $127.6 billion was slightly below forecasts. An approximately $8.7 billion investment loss, including the SpaceX stake, further reduced reported profit. Alphabet Misses Q3 Earnings and Revenue Estimates
• Negative Sentiment: Search and YouTube monetization disappointed. Search revenue growth slowed to roughly 12%, despite record query growth, because AI-powered search generates less advertising revenue than traditional search. YouTube advertising revenue also fell short of estimates, intensifying concerns that AI could erode Alphabet’s core profit engine. Google Search Revenue Growth Slows
• Negative Sentiment: AI spending is pressuring cash generation. Capital expenditures reached roughly $51.4 billion and quarterly free cash flow turned negative by about $9 billion. Investors are questioning whether future AI returns will justify the spending, debt, purchase commitments and potential share dilution. Alphabet Falls After Earnings
• Negative Sentiment: Analysts lowered expectations. UBS cut its price target to $332 from $380 and retained a neutral rating, citing weaker advertising growth and cloud-margin concerns; Citizens also downgraded the stock to market perform.

Alphabet Company Profile

Alphabet Inc is a technology holding company best known as the parent organization of Google. Founded in 2015 through a corporate restructuring, Alphabet oversees Google and a collection of businesses focused on technology, online services, communications, artificial intelligence, and other emerging areas.

Google’s principal products and services include its internet search engine, digital advertising platforms, YouTube, Android, Chrome, Google Maps, Google Play, and Google Workspace. The company also provides cloud computing, data storage, cybersecurity, productivity, and artificial intelligence services through Google Cloud.