Alphabet’s Class A shares fell 12.6% to $283.82 on Thursday, their worst day since the stock began trading in 2004, after search revenue missed growth expectations. Search and other revenue increased 12% in the third quarter to $63.35 billion, below the 15% analysts expected, while Google Cloud more than doubled revenue to $30.71 billion. Bank of America now values the search business at about 10 times earnings, compared with 18.7 times for the S&P 500 and 13 times for the energy sector, and cut its price target to $380. Capital expenditures are forecast to reach $200 billion in 2026 and $300 billion in 2027, contributing to negative free cash flow of $9.1 billion in the quarter. Slower search growth, compounded by users shifting toward AI-generated summaries, is the main risk for the group, although Google Cloud and the international monetization of those summaries offer sources of growth.
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