Alphabet (GOOGL) shares fell roughly 12% on Thursday after third-quarter results ended the company's run of 12 straight quarterly earnings beats. The stock traded at $285.31 Thursday morning, down 12.18% on the day, leaving it more than 30% below its May high of $404.47. According to Barron's, the one-day decline erased about $560 billion in market value.

The trigger was GAAP earnings per share of $2.12, which fell short of the $2.97 consensus estimate. An $8.7 billion loss on equity securities reduced EPS by $0.55, meaning even excluding that hit, earnings of $2.67 would still have missed consensus — though by a narrower margin than the headline figure suggests. Revenue came in at $127.58 billion, close to the $127.83 billion estimate, and grew 24.6% from a year earlier. Operating income rose 30% to $40.58 billion, though Wall Street had looked for about $43 billion. The quarter frames the tension running through the whole report: a decelerating advertising core set against accelerating AI-driven demand elsewhere in the business.

Search Slows, Cloud Surges

Search and other revenue reached $63.35 billion, up 12%, missing expectations. Ad spending growth on Google search slowed to 12% from 17% the prior quarter, and YouTube ad spending growth eased to 9% from 13%. The slowdown carries weight because search remains Alphabet's largest revenue line, at roughly half of total sales.

Google Cloud was the standout, with revenue growing 103%, ahead of Azure at 48% and AWS at 37%. Management cited a $561 billion backlog, up 256%, with about 55% of it expected to convert into revenue within 24 months. Compute availability remains the main constraint on faster growth, which ties the cloud outlook directly to the company's capital spending plans.

CEO Sundar Pichai said the Gemini app has reached one billion users. He also noted that year-over-year query growth is the highest in five years. Management described AI searches as additive to the business rather than a drain on it — a direct answer to concerns that AI could cannibalize search usage.

Spending, Valuation and Analyst Views

Capital spending hit $51.355 billion in the quarter, and free cash flow came in at negative $9.065 billion. Management repeated its 2026 capex guidance of $195 billion to $205 billion and expects a further material increase in 2027. Given the compute bottleneck management flagged, how that spending translates into the 24-month backlog conversion is one of the clearest markers to watch in the quarters ahead.

Goldman Sachs cut its price target to $385 from $435 while keeping its Buy rating, noting the stock trades at about 18x its 2027 EPS estimate. Barron's also maintained its Buy call, observing that Alphabet trades at 18 times forward earnings, compared with 19 for the S&P 500 and 36 for Apple.

Analysts were split on the quarter. Melius analyst Ben Reitzes called it evidence of secular decline, while KeyBanc's Justin Patterson characterized it as an "air pocket," saying search headwinds are transitory. Of 62 analysts tracked, 57 rate the stock Buy or Strong Buy. The coming quarters of ad-growth data and backlog conversion are what will test those two readings.

Alphabet stock last traded at $279.84, down 1.11%, within a 52-week range of $270.00 to $408.10.

This article is based on reporting by CoinCentral.