Alphabet shares fell about 10% in premarket trading after its third-quarter results missed EPS consensus by 28.52% and ended a 12-quarter beat streak, even though Google Cloud grew 103%. Capex reached $51.36 billion, free cash flow was negative $9.07 billion, and management signaled a significant increase in 2027 spending. The article contrasts this with Oracle, which rose 11% after targeting more than $30 billion in annual free cash flow by FY2029. Amazon reports tonight with AWS revenue up 37% last quarter to $42.23 billion, a 39.4% operating margin, and a raised 2026 cash capex outlook of about $220 billion from $200 billion. The author is watching whether AWS holds near 37% growth and whether Andy Jassy gives a free cash flow recovery timeline, since he cited servers breaking even in a little less than three years but gave no date for free cash flow.
Summary written by Upside AI from the original article. Read the source for full details.
Read the original on Yahoo Finance ↗
Keywords
GOOGLAmazoncloud computingearnings
Open a keyword to see other news on the same topic.
Related tickers and likely impact
GOOGL
▼ Likely negativeAlphabet Inc. (Class A)
Relevance: medium
| Market | US stocks |
|---|---|
| Sector | Communication Services |
| Industry | Interactive Media & Services |
| Market cap | $4.0T |
| Close on 10/28/2026 | 325.61 |
| Change that session | +1.57% |
Impact is scored by AI from the headline and may be wrong. It is not investment advice.
Related news
- Amazon vs. Alphabet: Is GOOGL's Cloud Growth Being Undervalued?
Amazon and Alphabet are making their cloud businesses more profitable while heavy AI infrastructure spending weighs on cash flow, and their stocks trade at similar valuations: 23.64 times forward earnings for Amazon and 22.83 for Alphabet, per Yahoo Finance. AWS posted $42.2 billion in second-quarter sales, up 37%, with operating income rising to $16.6 billion from $10.2 billion, though it accounts for only 21% of sales. Google Cloud revenue jumped 82% to $24.8 billion and its operating income rose from $2.8 billion to $8.8 billion, giving investors reason to reassess the gap with AWS. Beyond cloud, Amazon's North American retail operating income reached $9.1 billion and advertising grew 26%, while Alphabet's Search and other revenue rose 17% to $63.3 billion and consolidated operating income climbed 30% to $40.8 billion. The core question is which company earns more from the money it invests.
- Alphabet Sinks 11% as AI Spending Pushes Cash Flow Negative Again; Microsoft and Meta Edge Higher, Amazon Slips
Alphabet shares fell about 11% in early trading after its Q3 2026 revenue reached 127.58 billion USD, up 25%, but EPS of 2.12 USD missed estimates, mainly due to an 8.7 billion USD loss on its equity investments. Capital spending rose to 51.3 billion USD, pushing free cash flow to negative 9.1 billion USD, its second straight negative quarter; to fund the buildout, Alphabet issued 28.7 billion USD in senior unsecured debt and raised 12.4 billion USD through at-the-market stock sales. Google Cloud revenue grew 103% to 30.71 billion USD. In contrast, Microsoft reported revenue of 92.3 billion USD, up 19%, adjusted EPS of 4.89 USD above the 4.72 USD consensus, capex of 45.2 billion USD and positive free cash flow of 18.6 billion USD. Microsoft and Meta edged higher while Amazon slipped 2%.
- Prediction: Earnings Will “Double” at Amazon, Alphabet and Meta in Five Years
Whitney Tilson said on Bloomberg Surveillance that he looks for quality companies whose earnings will double in five years, which takes about 15% annual growth. Consensus estimates for Amazon and Alphabet point to normalized EPS growth of about 26% and 24% a year from 2026 to 2028, ahead of that pace; Amazon's normalized EPS is expected to rise from $8.31 in 2026 to $13.27 in 2028. Meta's EPS is seen flat at $30.18 in 2026, then rising 16% in 2027 and 15% in 2028. Free cash flow remains the key issue: Amazon's is forecast at negative $33.9 billion in 2026 and negative $8.1 billion in 2027 before turning positive, while Alphabet posted negative free cash flow of $5.9 billion in its second quarter. Janus Henderson's Alison Porter expects capex to peak around 2028, and the author suggests Amazon could reach the goal first while Meta needs the most to go right.
- Is Amazon (AMZN) a 'Buy' Ahead of Earnings?
Amazon (AMZN) is set to report third-quarter results after the closing bell on Thursday, and the stock currently carries a Zacks Rank #3 (Hold). The company missed earnings estimates in two of the past three quarters. Analysts expect EPS of $2.01, up 3.1% year over year, and revenue projected to rise 12.2% to $202.1 billion; estimates for the quarter have fallen 1.95% over the past 60 days. The article cites international expansion and AI integration as strengths, while heavy capital expenditure on AI infrastructure, a growing debt burden and competition from Microsoft Azure and Google Cloud are concerns. Shares are up about 9% in 2026, lagging a broader market that is up by double digits, and the article says an earnings beat may be what the stock needs to move higher.
- Is Amazon.com (AMZN) Undervalued As Investors Eye Q3 2026 Earnings?
The article asks whether Amazon.com (AMZN) is undervalued ahead of its third-quarter 2026 earnings on October 29, as investors focus on AWS, AI spending and profitability. The shares rose 9.9% over the past 90 days but fell 5.2% over the last week, while the 3-year total shareholder return is 87.2%. According to KiwiInvest, the narrative fair value is $475.09 per share against a last close of $249.09, implying a discount of roughly 48%. This assessment uses a discount rate of 8.0% and assumes higher-margin segments such as AWS, advertising and subscriptions account for a growing share of profits over time. Key risks include weaker-than-expected AWS or AI demand and retail profitability falling short.
- Prediction: Amazon Could Double by 2030 if This Part of Its Business Delivers
AWS revenue reached $42.23 billion in Q2 FY26, up 37% year over year and its fastest growth in 18 quarters, yet Amazon shares at $262.59 sit below their 52-week high of $287.20. Amazon raised its 2026 capex estimate to roughly $220 billion from about $200 billion, citing higher memory costs, and free cash flow was -$7.6 billion on a trailing basis. The article's five-year base case puts shares at $489.98 by October 2030, while the consensus target is $331.46. Reaching $500 would require a 90.4% gain, implying a forward P/E of 47x on consensus FY2027 EPS of $10.5519. The author calls the target ambitious but credible if AWS keeps growing above 30%, AI margins follow the core cloud path, and revenue outpaces capex; a recession hitting enterprise cloud budgets is the main risk.
Related markets
Latest news
- Microsoft beat estimates while Google looks at a value hit, and rising risks at Nvidia
The 8:30 show covers the day's top stories, including earnings from Microsoft (MSFT) and Alphabet (GOOGL)(GOOG), mounting risks at Nvidia (NVDA), and the new touchscreen laptop Apple (AAPL) just debuted.
- European Central Bank keeps key interest rate on hold at 2.5%
The European Central Bank held its deposit facility rate at 2.5% on Thursday, as expected, after a 25 basis point hike in September, even though euro zone headline inflation rose to 3.8% last month, the highest since September 2023. The Governing Council said rising energy prices pose upside risks to inflation and downside risks to growth, while underlying inflation and wages are broadly stable and financing conditions have tightened. Energy price inflation reached 18.8% amid Middle East turbulence. Deutsche Bank's Mark Wall said the policy path is harder to predict and expected one more hike to 2.75% in December, probably the end of the hiking cycle, while Christine Lagarde is still president. He added that the institution is bigger than any one person, but uncertainty remains about decisions next year after Lagarde's announced departure.
- Tech stocks hit hard after Samsung, Fortinet, and ServiceNow miss earnings
Samsung expects capital expenditure to rise 60% to $63 billion this year as it competes with SK Hynix and Micron, but its chip division operating income came in 2% below estimates and it is holding off on future shareholder payout plans until January. Fortinet's weak results hit cybersecurity stocks, and ServiceNow showed slowing bookings growth. A Bloomberg report said Marvell is in talks to buy Lumentum in a big deal, and Marvell shares fell sharply. The hosts said concerns over AI spending, financing costs, and Alphabet's business model are real, not just sentiment.
- Alphabet heads for a $400 billion drop in market value, the biggest in its history
Alphabet (GOOGL) fell about 13% in early trading Thursday after third-quarter results, putting it on track to erase more than $400 billion in market value, the second-biggest one-day loss ever for a US-listed company behind Nvidia's roughly $593 billion on Jan. 27, 2025. Google Cloud revenue more than doubled to about $31 billion and the Gemini app passed 1 billion users, but search revenue rose 12% to about $63 billion, short of the roughly $65 billion estimate. Free cash flow swung to a loss of about $9 billion as AI spending climbed, and the company's stakes in AI labs also weighed. Pivotal Research CEO Jeffrey Wlodarczak said bears will argue AI is starting to seriously hurt the search business, while CFRA's Angelo Zino said the pullback probably represents an opportunity. Alphabet has lost more than $1.3 trillion since its May record, and Amazon's results after Thursday's close will show whether the problem is specific to Google's search business.
- Monetary policy decisions
The ECB Governing Council decided to keep its three key interest rates unchanged: 2.50% on the deposit facility, 2.65% on main refinancing operations and 2.90% on the marginal lending facility. Energy prices have kept rising, posing upside risks to inflation and downside risks to growth, while underlying inflation has been broadly stable and wages show no material response yet. Financing conditions have tightened since the last meeting, which is likely to weigh on inflation and growth. The Council aims for inflation to stabilise at its 2% target in the medium term, is not pre-committing to a rate path, and stands ready to adjust all its instruments within its mandate.
- The Economy Could Be Growing Too Fast for Warsh
The Fed held its target range at 3.75% to 4% on October 28, 2026, in a 10-2 vote, with Lisa D. Cook and Beth M. Hammack favoring a 25-basis-point hike. Chair Kevin Warsh said first-half GDP was revised up to 2.4% from 1.8% and third-quarter growth is likely above 3%, but pushed back on the idea that the economy is overheating. The Atlanta Fed's GDPNow stood at 3.3%, and a futures-based measure put the odds of a December hike at 86.0%. Headline PCE inflation was 3.4% in August and core was 3.0%, mostly tied to energy and core goods affected by the Middle East conflict and tariffs, which rate hikes do little to address. SPY is up 13.26% year to date, but its large tech holdings make it sensitive to a 10-year yield above 5%, and its outlook weakens if September core PCE tops 0.3% or the yield passes its October 5 high of 5.31%.
Get the briefing on Telegram or Zalo
Join the Upside Telegram channel or Zalo group for the Vietnam stocks and gold briefing at 8:00 and 19:00 (Vietnam time) on trading days, plus a weekly wrap on Saturday morning.