Google spent $51.4 billion on capital expenditure in the quarter to expand its AI infrastructure|Anthony Quintano|CC BY 2.0
Google’s artificial intelligence business continued to grow in the third quarter, but slowing search advertising revenue disappointed investors and sent Alphabet shares down about 10% in after-hours trading.
Alphabet reported $127.6 billion in revenue, up 25% year over year, but missed analysts’ expectations. Its cloud business delivered strong results, generating $30.7 billion in revenue, up 103%.
Search advertising revenue grew 12%, down from 17% in the second quarter. Google is seeing its fastest search query growth in five years as more users turn to AI Mode. Yet monetization remains a challenge, with AI-powered searches still generating less revenue than traditional queries.
Google spent $51.4 billion on capital expenditure in the quarter to expand its AI infrastructure. Its free cash flow turned negative at $9.1 billion, adding to investor concerns.
Chief Financial Officer Anat Ashkenazi said capital spending would increase significantly in 2027 as Google continues to invest in AI technology and cloud services.