Alphabet Falls 13%, Putting It on Course for Its Biggest Ever Post-Earnings Drop
Alphabet reported a larger negative free cash flow than analysts had expected while maintaining its spending guidance for the year.
TL;DR
- Alphabet's shares fell 13% in early trading, potentially marking its worst post-earnings reaction ever.
- Microsoft reported higher capital expenditures but within analyst projections, and positive free cash flow.
- Alphabet reported a negative free cash flow of $9.07 billion, significantly below analyst expectations.
- Alphabet maintained its full-year capital expenditure guidance of $195 billion to $205 billion.
- Search advertising revenue for Alphabet grew 12% but missed expectations, partly due to lower monetization within AI Mode.
- Alphabet's search business faces competition from AI chatbots like ChatGPT and Claude, and its own Gemini AI has lagged.
- Analysts noted Microsoft's measured approach to AI architecture and Alphabet's struggles with strategic decisions regarding its core business and AI disruption.