I=6
Alphabet shares fell 10% after the company missed both revenue and earnings expectations
-
Revenue rose 25% y/y to $127.58 billion, below analysts’ estimate of $128.22 billion, while adjusted EPS was $2.67 versus $3.02 expected.
-
Alphabet’s search revenue rose 12% to $63.35 billion, below $64.96 estimate.
-
Cloud revenue more than doubled to $30.7 billion, exceeding analysts’ estimate of $28.7 billion.
-
The company maintained its 2026 capex guidance of $195-$205 billion but said they continue to expect it to rise significantly in 2027.
-
Philipp Schindler, Chief Business Officer, said in the earnings call that AI is driving better ads personalization.
“The integration of Gemini models into our ads infrastructure is improving how we decode user intent and drive ads relevance.” “For instance, through several innovations in personalization modeling, we delivered 18% incremental advertiser value and an 8% increase in user sentiment on Discover Ad in 2026.”
-
Alphabet attributed the slowdown in Search advertising revenue growth to foreign exchange headwinds, weaker spending by some Asia-Pacific retailers due to elimination of de minimis exemption in the EU, normalization of media and entertainment advertising following the FIFA World Cup, and lower monetization of rapidly growing AI Mode queries.