Alphabet Shares Post Worst 22-Year Slide After Earnings Disappoint

Alphabet stock tumbled by close to 12% on Thursday morning, heading toward its sharpest post-earnings decline on record. The company's AI-powered search is attracting more users while generating lower advertising revenue.

The decline wiped out about $465 billion from the company's market capitalization, exceeding triple the $127.6 billion in quarterly revenue Alphabet reported.

Google Search Revenue Growth Decelerates Sharply

Third-quarter search revenue climbed 12% to $63.35 billion, a deceleration from the 17% growth seen in Q2. The figure missed analysts' projections of roughly 15%.

According to Chief Executive Sundar Pichai, query volumes increased at the highest rate in half a decade. However, Chief Business Officer Philipp Schindler pointed to lower revenue from AI Mode as a factor behind the deceleration, as noted by Search Engine Journal.

AI Mode, Google's conversational chatbot-style search, produces lower advertising revenue per query compared with traditional search results, and the company continues to experiment with integrating ads within the feature.

Alphabet $GOOGL -13%, on track for its WORST post-earnings decline on record:

As fears over the future of Google Search intensify despite Cloud revenue more than doubling.

Search revenue growth slowed to 12% in Q3 from 17% in Q2, missing expectations of roughly 15%.

The… https://t.co/i72K1zYzoN pic.twitter.com/EQnGgwC12f

— Wall St Engine (@wallstengine) October 29, 2026

Capital expenditure is mounting. Free cash flow, defined as cash remaining after investment, fell to negative $9.1 billion, according to BeInCrypto’s initial earnings report.

“In a market worried about AI cannibalising the franchise, investors need to see search accelerating, not decelerating,” Reuters reported, citing Dave Wagner, portfolio manager at Aptus Capital Advisors.

Are Investors Still Confident in Alphabet After the Rout?

The stock had already dropped 7.1% following the July earnings release. Ahead of the third-quarter report, a pre-earnings analysis by BeInCrypto flagged $306 and $275 as downside levels; Thursday's slide broke the first.

“…on track for its WORST post-earnings decline on record: As fears over the future of Google Search intensify despite Cloud revenue more than doubling. Search revenue growth slowed to 12% in Q3 from 17% in Q2, missing expectations of roughly 15%,” noted Bull Theory, a popular account on X.

Google's Cloud business saw revenue jump 103% to $30.7 billion, backed by $561 billion in contracted but unbilled orders. Rosenblatt analyst Scott Devitt projects that Cloud will surpass the combined revenue from Search and YouTube advertising by 2028.

Even after the severe stock decline, analysts are still positive. Among 29 analysts monitored by TipRanks, 25 consider Alphabet shares a purchase, with an average target price of $398.50.

Most of those projections were made before the earnings release. The coming test is whether AI Mode advertising, now being expanded to an additional ten markets, can close the revenue gap.