News about search engines

Alphabet (GOOG) shares plunged more than 11% on Thursday after third-quarter revenue and earnings per share missed expectations, with search revenue rising 12% against a 15% forecast and YouTube advertising reaching $11.2 billion versus $11.4 billion expected. Google Cloud revenue grew 103%, beating expectations of 93%, with operating margins of 36.2% and backlog rising to $561 billion from $510 billion. Bank of America kept its rating but cut its price target to $380 from $430, while UBS lowered its target to $332 from $380 and kept a Neutral rating, questioning whether external TPU sales will lift profitability as cloud margins were flat quarter over quarter. Investors remain concerned about spending, as Alphabet kept its 2026 capital expenditure outlook at $195 billion to $205 billion and recorded negative free cash flow for a second straight quarter, more than $9 billion in the red. Kathleen Brooks of XTB said the main concern for investors is weaker-than-expected advertising and search results.

Alphabet shares slipped after its third-quarter earnings report and are down about 20% from a May peak. Google Search holds about 90% of the search market, while AI products such as Gemini and TPUs, along with Google Cloud, are driving growth. Free cash flow was negative about $9 billion, deeper than negative $5.8 billion in the second quarter, and revenue and net income missed analyst estimates. Still, revenue rose 25% to $127 billion and Google Cloud revenue surged 103% to more than $30 billion, while the company kept its $195 billion to $205 billion capex guidance for the year and said spending will rise significantly next year. The author argues that the stock at 27x forward earnings, down from nearly 34x, may be a once-in-a-decade opportunity for growth investors, while noting that a slowdown in demand is a risk.

Alphabet (NASDAQ:GOOGL) reported Q3 2026 revenue of $127.6 billion, up 24.7% year on year and in line with Wall Street's $127.9 billion estimate. GAAP EPS of $2.12 fell 29.5% short of the $3.01 consensus, mainly due to an $8.7 billion loss on equity securities versus a $10.7 billion gain a year earlier. Operating margin rose to 31.8% from 30.5%, while free cash flow margin was -7.1%, down from 23.9%. The article notes five-year annualized revenue growth of 14.5%, ahead of Amazon (11.4%), Microsoft (14.2%) and Apple (5.2%), and argues Alphabet is somewhat expensive but still worth owning. It also questions whether generative AI products such as ChatGPT could disrupt Google Search, which accounts for 53.1% of revenue and holds over 80% market share.