Asian shares and U.S. futures are mixed after Google parent Alphabet's earnings disappoint

Alphabet (GOOGL) shares fell 10% after-hours as Q3 earnings of $2.12 per share and revenue of $127.6B missed estimates. Ad revenue underperformed, while Google Cloud revenue surged 103% to $30.7B. Capital expenditure reached $51.4B, and investment losses reduced earnings by $0.55 per share.

Alphabet's shares dropped 10% after reporting a $9.07B negative free cash flow due to AI expansion. Revenue grew 25% YoY to $127.6B, missing estimates. The company raised its annual expenditure forecast to $205B in July.

Analysts debate Google's search momentum amid AI competition, while Alphabet reports Q3 revenue growth of 25% to $127.6B, with cloud sales up 103%. Retail sentiment on GOOGL shifted from 'extremely bullish' to 'bullish'. Stock is up 4% YTD.

Alphabet reported $26.2B net income but negative $9.1B free cash flow for Q3 2026, driven by a 114% increase in capital expenditure to $51.4B, primarily for AI infrastructure. Operating cash flow fell 13% to $42.3B. The company financed the gap with $28.7B in new debt and $12.4B in new shares, with no stock buybacks.

Google aims to integrate ads into AI-driven shopping, emphasizing user choice. Philipp Schindler, Google's chief business officer, highlighted that users value discovery and comparison, creating ad opportunities. Google's Q3 revenue missed expectations at $127.58B, with shares dropping 10% after hours. Investors worry about AI's impact on Google's ad business.

US futures fell as Alphabet's earnings raised concerns about AI spending. Alphabet shares dropped 10% in after-hours trading, losing $400B in market value. Microsoft shares gained 4% on strong Azure growth. Smaller tech stocks like ServiceNow and Fortinet also declined. Investors focus on Amazon's earnings and AI spending plans.