Alphabet Stock Falls 8% Even as Cloud Sales Double: Is AI Spending the Problem?

Alphabet shares fell 7.79% in after-hours trading on Wednesday after the Google parent reported quarterly results in which Google Cloud revenue more than doubled to $30.7 billion. Capital spending also more than doubled, to $51.4 billion, exceeding operating cash flow of $42.3 billion and leaving free cash flow at minus $9.1 billion. Total revenue rose 25% to $127.6 billion but was just below the $127.93 billion analysts expected, while operating income of $40.58 billion missed the $43.16 billion estimate and earnings per share fell 26% to $2.12. Google Cloud’s profit margin widened to 36.2% from 23.7% a year earlier.