Alphabet stock drops after first earnings miss in four years

Alphabet's third-quarter results missed Wall Street expectations, triggering a nearly 11% premarket stock drop and a downgrade from Citizens to market perform amid concerns about search monetization and heavy AI spending. The Google parent reported adjusted earnings of $2.67 per share on revenue of $127.58 billion, both below LSEG consensus, marking its first top and bottom line miss in nearly four years. Negative free cash flow of $9.07 billion also fell far short of the $2.70 billion anticipated, while search revenue came in softer than expected. Analysts offered mixed reactions, with several trimming price targets while maintaining buy ratings. Bank of America noted tougher comparisons through mid-2027 but saw potential for growth uptick by early next year, while Morgan Stanley highlighted strong TPU sales and query growth as positive signs despite near-term challenges.