Alphabet's latest financial results highlighted the challenge of balancing artificial intelligence investment with the performance of its established businesses. According to Reuters, the company's shares fell nearly 10% in after-hours trading following its quarterly results. Google Cloud revenue more than doubled to $30.71 billion, reflecting strong demand for cloud services, including computing infrastructure used for AI workloads.
The financial picture was less positive elsewhere. Reuters reported that Alphabet recorded negative free cash flow of $9.07 billion, while Google Search revenue grew 12% in the September quarter. That search growth fell short of expectations for a 14.7% increase. Alphabet was also expected to spend as much as $205 billion in capital expenditure during the year, with further increases planned for 2027.
These figures matter because Google's established advertising business helps finance its AI development. At the same time, AI chatbots and agents are changing how people seek information, raising questions about the future of traditional search and its advertising model. The results show that rising demand for AI infrastructure does not automatically translate into stronger cash generation across every part of a technology company.
Reuters reported that Google Cloud's growth remained a bright spot, while investors focused on spending and the performance of search. Alphabet's results therefore illustrate two connected business questions: whether companies can earn revenue from AI services and whether those earnings can cover the cost of expanding the infrastructure behind them.