At least one analyst downgraded Alphabet from buy to hold. The downgrade cites concerns over its core search business and heavy artificial intelligence spending.
Google's Search revenue growth decelerated to 12% in the third quarter. This is down from 17% in the previous quarter.
The slowdown raises questions about monetizing AI-powered search queries, despite an increase in overall search activity. Alphabet's surging capital expenditures on AI infrastructure compound these concerns. These expenditures led to a negative free cash flow exceeding $9 billion last quarter.
Google Cloud revenue showed strong triple-digit growth. However, increased spending and uncertainty in the core advertising business prompted a more cautious outlook from some market observers.