Alphabet shares fell 7.79% in after-hours trading on Wednesday, even as Google Cloud sales more than doubled to $30.7 billion. Spending more than doubled too.
The Google parent spent $51.4 billion on data centers and other capital projects in three months. That was more cash than its business brought in, leaving free cash flow at minus $9.1 billion.
Cloud Sales Doubled, and So Did Spending
Total revenue rose 25% to $127.6 billion, according to Alphabet's results. Google Cloud grew 103%, and its profit margin widened to 36.2% from 23.7% a year earlier.
Still, the headline numbers fell short. Revenue landed just below the $127.93 billion analysts expected. Operating income of $40.58 billion missed the $43.16 billion estimate.
Capital spending jumped 114% from a year earlier. Operating cash flow of $42.3 billion could not cover it.
ALPHABET $GOOGL Q3’26 EARNINGS HIGHLIGHTS
— Wall St Engine (@wallstengine) October 28, 2026
🔹 EPS: .12
🔹 Revenue: 7.6B (Est. 8.22B) 🔴; +25% YoY
🔹 Google Cloud Revenue: .7B (Est. .15B) 🟢
🔹 Search & Other: .4B (Est. .99B) 🔴
🔹 YouTube Ads: .2B (Est. .4B) 🔴
🔹 CapEx: .4B (Est. .2B) 🟢
🔹… pic.twitter.com/adgjWRXUKc
Earnings per share dropped 26% to $2.12. The stock slid to $296.81 from a $321.89 close.
Alphabet Stock Performance. Source: Yahoo Finance Alphabet's Cash Gap Grows as Warsh Says Rates Are Reaching Tech
Alphabet reported hours after Federal Reserve (Fed) Chair Kevin Warsh questioned a popular market belief. He doubts that higher interest rates leave AI untouched.
*WARSH: SKEPTICAL OF THE VIEW INTEREST RATE HIKES WON'T AFFECT AI
— tradfi news (@tradfi) October 28, 2026
In his view, rates are already weighing on the technology complex. Warsh also noted wider credit spreads, the premium companies pay to borrow over US government debt.
For Alphabet, borrowing costs now carry more weight. Its quarterly spending outran operating cash by $9.1 billion, a gap that has to come from savings or debt.
Big Tech has already leaned hard on bond markets. Alphabet and four peers now make up 4.8% of the US investment-grade corporate bond market, up from 2% a year earlier.
Those figures come from a Bank of Korea report on AI financing, cited by Herald.
Investors have already punished heavy AI spenders this month. Oracle fell nearly 9% in one day after a bond scare at AI cloud firm CoreWeave.
On the other side, over the past 12 months, Alphabet still generated $19.7 billion in free cash flow. Its cloud business is also more profitable than a year ago.
Microsoft, reporting the same evening, rose after spending less than expected. Days earlier, BeInCrypto reported investors faced a no-win test for Big Tech, punishing both spending hikes and cuts.
Read the Original story Alphabet Stock Falls 8% Even as Cloud Sales Double: Is AI Spending the Problem? by Lockridge Okoth at beincrypto.com