Alphabet Revenue and Profit Miss Expectations, AI Returns Under Pressure

On Oct 29, according to Jin10, Google parent Alphabet reported quarterly revenue and profit both below market expectations, indicating that the company has not yet been able to generate sufficient returns from its artificial intelligence business to justify its massive investments.

Alphabet stated that for the three months ended Sept 30, revenue was $111.2 billion net of payments to partners, and earnings per share were $2.12, both falling short of Wall Street expectations. Capital expenditures climbed to record levels as the company built AI infrastructure for itself and its customers.

Alphabet noted that these investments have helped it become one of the top providers of computing power to AI companies such as Anthropic and Meta. The company is also developing its own AI models and integrating them into products like Search, YouTube, and Gmail. However, relative to the scale of spending, these efforts have yet to yield corresponding returns, with Alphabet shares dipping as much as 7.9% in after-hours trading.