Alphabet shares plunge 13% as cloud growth fails to offset weak search ads

Alphabet shares fell 13% at Thursday's open after the Google parent reported weaker-than-expected third-quarter revenue and profit, intensifying investor concerns that artificial intelligence may undermine its core search advertising business. The company posted total revenue of $127.6 billion, below analyst forecasts of $128.2 billion, with earnings per share of $2.12 versus an expected $3.02. Search advertising grew 12% to $63.35 billion, missing expectations, while free cash flow turned negative at $9.07 billion. Google Cloud revenue more than doubled to $30.71 billion but failed to reassure investors. Several analysts lowered price targets while maintaining positive ratings, citing strong cloud growth and AI positioning. JPMorgan kept an "Overweight" rating, arguing search headwinds are manageable, while Raymond James cut its target to $350 from $400. The decline would mark Alphabet's worst post-earnings reaction since its 2004 IPO.