Alphabet Q3 Earnings Miss as Search Growth Slows and AI Monetization Lags

Alphabet shares fell over 13% after its third-quarter earnings missed revenue and profit estimates, driven by slowing Search growth and non-recurring costs. Search revenue growth slowed sharply to 12% year-over-year, missing consensus, which management attributed to low AI Mode monetization, currency headwinds, and a tough comparison. Google Cloud revenue accelerated to 103% year-over-year with margin expansion, justifying elevated capital spending. The stock trades at 14.8 times trailing earnings, below its five-year average, but a potential value trap could cap gains if Search faces a structural slowdown. Management warned of even tougher year-over-year comparisons in the fourth quarter and first quarter of fiscal 2027.