'burning Cash': What Wall Street Is Saying About Alphabet's Dismal 3rd-quarter Earnings

• Alphabet's Q3 earnings has sparked a wave of concern among investors.
• The tech giant missed on earnings and revenue and saw slowing revenue in its search business.
• Analysts are raising concerns about the firm's ability to fund the AI buildout and near-term headwinds.

It's one of Alphabet stock's worst-ever days.

It's been increasingly difficult to please investors on the front lines of the AI trade, but Wednesday night was a bad one for Alphabet on all fronts, with the Google parent delivering an across-the-board earnings miss for the third quarter.

Its latest results — which also showed declining growth and the tech giant's free cash flow turning negative for the first time ever — have sparked a historic sell-off in its stock. Shares are now on track to shed more than $400 billion on Thursday, which would mark the firm's largest-ever single-day market loss in history.

Here are the figures investors fretting over:

Alphabet's search business, notably, is seeing slower revenue growth. Revenue in that segment grew 12% compared to the same time last year, raising concerns that the company's core revenue stream is being pressured by AI, even as it races to compete with other tech giants in artificial intelligence.

Capex spending, while somewhat less in-focus given the big earnings miss, was also notable. Alphabet maintained its full-year capex guidance for 2026 at around $195 billion to $205 billion, but said capex would increase "significantly" next year. Investors have been skittish around such heavy spending by tech giants, raising questions about funding and the return on investment in AI.

Here's everything Wall Street has to say about the results:

'Poor print' could be why Alphabet launched newest AI model: JPMorgan

Market intelligence strategists at JPMorgan flagged investors' widespread disappointment with Alphabet's earnings. The pricing decline associated with Alphabet's search business, in particular, is "way worse than investors were thinking," the bank wrote in a client note.

While operating margins were "fantastic," investors are likely also taking in how cloud revenue growth missed buy-side expectations, as did consolidated operating income, strategists said.

"All told, this was a poor print … and now makes it clearer why Sundar launched Carbon intra-day," the note said, referring to Google's latest AI model, Gemini 4 Carbon, which it released several hours before its third quarter earnings report.

Alphabet could remain under pressure near-term: Bank of America

Analysts at Bank of America foresaw "tougher comps" pressuring Alphabet through the second quarter of next year, but remained positive on the business growth potential overall. The bank pointed in particular to AI-assisted search, which helped search traffic accelerate last quarter.

"However, with ads in Intl. AI Overviews launching this quarter, better AI models being deployed, and commentary that ads are performing in Overviews, we think there is potential for a growth uptick as early as 1Q."

"Google's AI traffic strength & strong execution through prior tech. transitions & competitive ad-platform ad ramps gives us confidence in ability to navigate this cycle," analysts added.

Bank of America reiterated its "buy" rating on Alphabet but lowered its price target for the stock from $430 a share to $380," implying 17% upside from current levels.

Alphabet doesn't look like an AI winner today: Bernstein

Bernstein raised concerns about Alphabet's search slowdown. Companies at the forefront of the AI trade need a "clean story to pique investor interest," Mark Shmulik, a senior analyst at the firm, wrote in a note Wednesday morning.

"It only matters if numbers track in the right direction. Google's AI-tailwind story for search behavior (which we believe) only lands if search growth tracks in the right direction... If you're explaining you've already lost," he said.

"Is Google an AI winner? Probably, but not today," Shmulik added.

The firm maintained its "Market Perform" rating on Alphabet but cut its price target for the stock from $385 to $325 a share, implying 15% upside from current levels.

Alphabet to face significant challenges ahead: Citizens

Analysts at Citizens downgraded Alphabet from "Market Outperform" to "Market Perform," citing the tech giant's slowing search revenue. Though the company saw strong search query growth last quarter, monetization in Google's search business is "challenged," a team led by Andrew Boone wrote in a client note on Thursday.

"While we acknowledge Google is well-prepared to offer an agentic experience, it will take execution to effectively transition monetization from AI Overviews to agents, and it expects to launch a consumer agent by year-end," analysts said.

"The slowdown in search surprised us this quarter as we thought Google was capturing more of the benefit of an expanding search market from AI, giving it more runway to make this transition," the firm said, later adding that they saw "significant execution risk" ahead for the business.

Results reflect AI cash flow reckoning: David Rosenberg

Top economist David Rosenberg pointed to the disappointment following Alphabet's earnings and renewed concerns among investors that the tech giant could be spending too much on the AI buildout. All in all, it reflects fears about "AI's Cash Flow Reckoning," Rosenberg said, pointing to how investors have punished heavy capex spenders in recent memory as concerns over the AI trade grow.

"The company is burning cash at a rapid clip," Rosenberg said. "The main message is that investors now reward AI spending that is paid for out of operating cash and punish spending financed with debt. Negative free cash flow is forgiven only alongside a clean beat."

Cloud business is still wowing investors: Dan Ives

Though Alphabet's search revenue grew more slowly than investors expected, the company delivered on its cloud business, with revenue in that segment soaring 103% year-over-year, Dan Ives, a prominent tech bull and a senior managing director at Yorkville Ives & Co., wrote in a client note.

"This is the Cloud print we have been waiting for, and in our view it matters more than a lighter Search number the bears will lean on tonight. Cloud doubling on contracted demand with margin expanding at the same time settles the demand side of the capex debate for this quarter," Ives wrote of the positive signal for the AI trade.

The firm maintained its "Outperform" rating on Apple and $400 price target, implying ____ upside from where shares early Thursday. Analysts said they were looking for more details on Alphabet's Cloud backlog, how growth in the cloud business splits between AI infrastructure, TPU systems, and other areas, as well as the firm's capex spending in 2027.

Investors are selling Alphabet for the "wrong reason": analyst Luke Lango

Investors are punishing Alphabet for funding the AI buildout with shareholder cash instead of cash it has on the sidelines, Luke Lango, an independent tech analyst, wrote in a note to clients shortly after Alphabet's earnings on Wednesday.

Lango added that Alphabet's business outlook remained positive.

"Wall Street is selling Alphabet for the wrong reason," he said. "But make no mistake: this is a 'how do we pay for it' problem, not a 'nobody wants it' problem.

"AI demand is real, Alphabet's capex plan is intact, and the spending is about to accelerate into Q4. If you own the companies selling the picks and shovels, tonight is good news," he added.

Buying the post-earnings dip: Needham

The investment research firm said it remained a buyer of Alphabet following its latest earnings. Analysts pointed to 5 things in particular that made up their bull case for the stock:

1. Google selling TPU AI-computing systems means its internal teams would have to compete for TPU capacity with external buyers. The scarcity will push Google to direct its capex investment towards projects with the highest return potential, maximizing the firm's return on invested capital.
2. The company is using AI to build new platforms with more revenue upside.
3. Alphabet embedding AI into Chrome, Android, Cloud, YouTube "maximizes scale economies," analysts said.
4. The firm is launching its agentic tools to enterprise customers first, which "prioritizes proven willingness to pay"
5. AI helped accelerate search query growth to a 5-year high, despite slower revenue growth in Google's search business overall.