Alphabet Shares Plunge After Rare Profit and Revenue Miss as 2027 Capex Signal Spooks Investors

Alphabet Inc. (Nasdaq: GOOGL) shares plunged after the company reported its first combined revenue and profit miss in nearly four years, even as Google Cloud revenue more than doubled and the Gemini app crossed 1 billion users, according to CNBC and AFP. The selloff came alongside a warning from finance chief Anat Ashkenazi that capital expenditures are set to rise significantly again in 2027, deepening investor concern about the pace and payoff of Alphabet's artificial intelligence buildout.

A Rare Miss on Both Lines

Alphabet's net income fell to $26.17 billion, or $2.12 per share, from $34.98 billion, or $2.87 per share, a year earlier, CNBC reported. AFP described the decline as a 25% drop from the prior-year quarter, consistent with the reported figures: $34.98 billion minus $26.17 billion equals $8.81 billion, or about 25% of the year-ago total (our calculation, using the net income figures reported by CNBC and AFP). Operating income totaled $40.58 billion, missing a $43.19 billion forecast from FactSet cited by CNBC — a shortfall of about $2.61 billion, or roughly 6% below expectations ($43.19 billion minus $40.58 billion, divided by $43.19 billion; our calculation).

Revenue still grew 25% year over year, CNBC noted, but the combination of a profit miss alongside slower-than-expected top-line growth was enough to mark the company's first such dual miss in close to four years, per CNBC's reporting.

Where the Shortfall Came From

The drag came largely from Alphabet's core advertising businesses. Search revenue grew 12% to between $63.35 billion and $63.4 billion, according to CNBC and AFP, missing a $64.96 billion analyst estimate and slowing sharply from 17% growth in the prior quarter. AFP reported that overall advertising revenue grew 11% to $82.0 billion, also short of expectations, while YouTube advertising revenue growth slowed to 9% from 13% in the previous quarter.

Google Cloud was the exception, with revenue more than doubling, up 103% to $30.7 billion, beating the $28.7 billion analysts had expected, CNBC and AFP both reported. But Jefferies analyst Brent Thill, speaking on CNBC's Closing Bell: Overtime, characterized the beat as thin. "The cloud business was the only business that beat at 103% growth," Thill said, according to CNBC. "The Street wanted 100%, so it didn't beat by much, and it missed some of the high-end targets. Everything else missed." That framing, from a single analyst voice reported by CNBC, underscores how narrow the quarter's bright spot was relative to the misses elsewhere in the business.

The 2027 Capex Signal

The capital spending story dominated the earnings call. Alphabet's Q3 capital expenditures totaled $51.36 billion, CNBC reported, falling short of the $55.09 billion analysts had expected, a gap of about $3.73 billion, or roughly 7% below consensus (our calculation, based on the CNBC-reported figures). Even so, spending more than doubled from the roughly $24 billion spent a year earlier, according to AFP, which on the reported numbers represents an increase of more than 100% year over year (our calculation using the $51.4 billion and $24 billion figures cited by AFP).

Alphabet maintained its full-year 2026 capex guidance of $195 billion to $205 billion, a range it had already raised from $190 billion during the second quarter, CNBC and AFP both reported. The bigger shock for investors was forward-looking: Ashkenazi told analysts, as quoted by CNBC, "We continue to expect our capex to increase significantly in 2027, and will provide further details on our Q4 call." AFP similarly reported that the company said it would continue to increase capex spending significantly in 2027. Neither outlet cited a specific dollar figure or percentage for the 2027 increase.

To help fund the spending, Alphabet's long-term debt climbed to $125.1 billion from $21.6 billion a year earlier, an increase of about 479%, CNBC reported. AFP added that during the quarter Alphabet raised $28.7 billion by selling bonds and $12.4 billion by issuing new shares to help pay for its AI ambitions. Taken together, those figures suggest Alphabet is leaning more heavily on external financing than on cash flow alone to sustain its AI infrastructure build — an interpretation based on the reported debt and issuance figures, not a company statement.

Gemini Growth and Waymo's Widening Losses

Alongside the spending jump, Alphabet pointed to usage milestones. Google said its Gemini app reached 1 billion users, calling it the fastest-growing product in the company's history, according to both CNBC and AFP. In the Other Bets segment, which includes robotaxi unit Waymo, AFP reported an operating loss of $2.0 billion against revenue of $372 million. Waymo now provides more than 500,000 paid rides per week across 15 U.S. metropolitan areas and aims to reach one million weekly rides by year-end, per AFP's reporting.

CEO Sundar Pichai sought to frame the investment scale as strategic rather than reactive. "I would broadly think of all of this as a long-range planning process, not a short-term allocation exercise," Pichai told analysts, as quoted by AFP.

Bottom Line

Alphabet's quarter combined a rare profit and revenue miss with a cloud business that grew faster than expected but not by enough to offset slowing search and advertising growth, based on the figures reported by CNBC and AFP. The market's sharper reaction appears tied to the forward signal on 2027 capital spending and the financing behind it, including a near-fivefold jump in long-term debt and fresh bond and equity issuance. With Alphabet withholding specific 2027 capex figures until its Q4 call, investors are left weighing continued AI investment against a cooling core ad business, without yet knowing the scale of spending still to come.