Alphabet stock slides 13% as AI spending and weak ad growth dent Q3 results

Alphabet shares fell 13% on Tuesday after the company reported third‑quarter earnings that missed analysts’ expectations. The miss was driven by heavy spending on artificial‑intelligence projects and a slowdown in search‑advertising revenue growth. Revenue rose 25% year‑on‑year to $127.58 billion, but net profit dropped 25% to $26.17 billion. Free cash flow turned negative, showing a cash outflow of $9.1 billion for the quarter. Capital expenditure surged, adding to investor worries about the firm’s cash balance. Analysts highlighted that the AI‑related costs are likely to remain high as Alphabet expands its cloud and generative‑AI services. The share price reaction reflected market concern that the cash burn could pressure future profitability. ## Context The slowdown in search ad growth is part of a broader trend where advertisers shift spend to other digital platforms, while AI investments require large upfront spending on data‑centres and talent, often reducing short‑term cash flow.