Alphabet shares fell 10% in after-hours trading on Wall Street after the company reported third-quarter 2026 results on Wednesday, October 28, 2026, that missed expectations on both revenue and earnings.

The trigger was the drop in free cash flow. Investors are pressing harder on what returns the hyperscalers will actually collect from the billion-dollar investments they are making to build artificial intelligence infrastructure. (Hyperscalers are the handful of cloud giants, such as Google, Amazon and Microsoft, that operate data centers at massive scale.)

The reaction spread beyond the stock. Nasdaq futures fell more than 1%.

Negative cash flow and the first double miss in nearly four years

Cash flow at Alphabet, the holding company that owns Google, came in at -$9.07 billion, far worse than expected. It confirms the fears of those who worry that AI investments are leading US Big Tech to burn through cash.

The math is simple. Alphabet collected $42.3 billion in cash from operating activities and spent $51.4 billion on property and equipment, leaving free cash flow $9.1 billion in the red.

Other line items were weak as well. Net income came in at $26.17 billion, or $2.12 per share, down from $34.98 billion, or $2.87 per share, a year earlier.

Pro forma earnings per share were $2.67, below the $3.02 expected.

Capital expenditures reached $51.36 billion, under the $55.09 billion forecast.

Revenue grew 25% to $127.58 billion, below the $128.22 billion analysts expected.

It was the first time in nearly four years that Alphabet missed on both lines.

Long-term debt jumps 479%

Operating income also came in short, at $40.58 billion against a FactSet consensus of $43.19 billion.

Debt rose sharply during the quarter. Long-term debt soared 479% to $125.1 billion, from $21.6 billion a year earlier.

The group confirmed its spending forecast for full-year 2026. It had raised the estimate in the second quarter to a range of $195 billion to $205 billion, up from $190 billion.

Annual investments are expected to exceed $200 billion this year and surpass $300 billion in 2027.

CFO Anat Ashkenazi said the company continues to expect a significant increase in capital expenditures through 2027.

Equity stakes swing to a loss as cloud revenue doubles

Alphabet booked an extraordinary gain of $99.03 billion in the second quarter tied to equity holdings, driven above all by its stakes in SpaceX and Anthropic. In the third quarter, those investments generated a loss of $8.66 billion.

The cloud division, which also includes AI-based products and services, was the bright spot.

Thomas Kurian, CEO of Google Cloud, spoke of “extraordinary demand” and of “ robust growth from artificial intelligence labs, capital markets, financial institutions and businesses”.

Cloud revenue more than doubled to $30.7 billion, beating the $28.7 billion analysts had forecast.

The unit continued to take market share from larger rivals Amazon Web Services and Microsoft Azure.

It was not enough to offset the rest of the quarter.

Gemini app reaches 1 billion users

Alphabet’s push on artificial intelligence models is showing signs of consumer adoption.

Google said its Gemini app has reached one billion users, making it the fastest-growing product in the company’s history.

CEO Sundar Pichai told analysts the group is already seeing strong demand for the recently launched Gemini Argon model.

The latest release, the Carbon version announced on Wednesday, October 28, 2026, surpasses Argon “in almost every area”, Pichai said.

Pichai points to fastest query growth in five years

Search revenue grew 12% to $63.35 billion, below the $64.96 billion analysts had forecast.

Pichai remains optimistic. On the conference call, he said AI investments helped generate the highest search query growth rate of the past five years.

Alphabet shares are down nearly 10% at $292.50. The stock closed Wednesday’s regular session up 1.34%, at $324.89, before the results came out.

Editor’s note

This article was originally published in Italian on money.it by Laura Naka Antonelli on October 29, 2026 as «Azioni Alphabet crollano dopo i conti, investimenti in AI bruciano cassa. Tutti i segnali che preoccupano Wall Street». It has been translated and adapted for an international audience by the Money.it International desk.