Alphabet's SpaceX stake triggers $11 billion paper loss in Q3

Alphabet's investment in Elon Musk's SpaceX caused an estimated $11 billion value decline in Q3, dragging net income down 25% to $26.17 billion despite strong operational growth. The paper loss stemmed from falling SpaceX share prices, contributing to a reported EPS of $2.12 that missed Wall Street forecasts. The unrealized loss reflects accounting requirements, not a sale of shares, as SpaceX stock dropped from roughly $171 to $151 during the quarter. Alphabet's operating income still rose 30% to $40.6 billion, with Google Cloud revenue doubling to $30.7 billion on AI infrastructure demand. Alphabet's capital expenditures hit $51.4 billion, more than double year-over-year, pushing free cash flow negative at $9.07 billion. Management projects 2026 capex of $195–$205 billion, while ad revenue underperformed and search growth slowed amid AI-driven results, causing shares to fall 10% in after-hours trading.