📉 Google has published its quarterly report, and shares are down by 9%.
The report fell short of analysts' expectations: earnings per share were $2.12 against a forecast of ~$3.03, and revenue was $127.6B compared to a forecast of $127.9B.
Google is facing challenging times: the advertising business is not growing as fast as before. Search brought in $63.4B (+12%) against expectations of ~$65B, and YouTube ads also fell short of forecasts. The main assumption is that AI search is displacing the classic model and impacting advertising. Google is not losing users: according to Sundar Pichai, the growth in the number of queries is the highest in five years. However, it seems that Google has not yet figured out how to monetize AI responses as effectively as traditional search with ads.
On the other hand, the server business has doubled: Google Cloud brought in $30.7B for the quarter (+103% year-over-year) and now accounts for more than a third of advertising revenue. Cloud's operating profit increased from $3.6B to $11.1B.
I think Google will find a new advertising model, and everything will be fine.
https://s206.q4cdn.com/479360582/files/doc_financials/2026/q3/2026q3-alphabet-earnings-release.pdf
#google@rvnikita_blog #ai@rvnikita_blog #gemini@rvnikita_blog #sundar_pichai@rvnikita_blog
