MOUNTAIN VIEW, California — October 29, 2026
Alphabet, the parent company of Google, came in below Wall Street's revenue expectations in its third-quarter earnings report, putting renewed attention on the financial returns from the technology industry's enormous investments in artificial intelligence.
The company reported revenue of $127.58 billion for the July–September quarter, up 25% from the same period a year earlier. However, analysts had expected approximately $127.97 billion, according to FactSet data cited by the Associated Press.
Alphabet reported net income of $26.17 billion, compared with $34.98 billion a year earlier. The company said its results were affected by an $8.7 billion loss on equity investments.
AI growth versus investor expectations
Chief Executive Sundar Pichai highlighted the company's business momentum and reported that the Gemini AI application had reached one billion users.
Despite these developments, Alphabet's shares fell roughly 9% in early after-hours trading following the earnings release. The market reaction reflected concerns about the company's results relative to expectations and the scale of its spending commitments.
Alphabet is competing with major technology companies to develop AI models, expand cloud computing and integrate AI features into search and other products. These investments can create new revenue opportunities but also require significant expenditure on computing infrastructure and specialised chips.
Why the results matter
The results highlight a growing challenge for large technology firms: demonstrating that rapid adoption of AI products can translate into sustainable profits and cash flow.
Investors will continue examining advertising performance, cloud revenue, infrastructure spending and management's outlook to assess whether the company's investment strategy is delivering adequate returns.
Share prices fluctuate, and the initial after-hours market reaction does not establish how the stock will trade over subsequent sessions.
