Google (GOOG, GOOGL) stock continued its sharp decline on Thursday, falling more than 12% after missing third-quarter earnings expectations, despite Google Cloud growing 103%. The stock is on track for its worst day since its IPO in 2004.
Google reported earnings per share (EPS) of $2.12 on revenue of $127.58 billion. Analysts expected EPS of $3.01 on revenue of $127.93 billion. Revenue excluding traffic acquisition costs was $111.21 billion. Wall Street expected $111.29 billion.
Google’s advertising segment reported revenue of $82.01 billion, compared to an expected $83.5 billion, while its cloud unit brought in $30.71 billion. Analysts expected revenue of $29.1 billion.
Google is also burning through its free cash flow, going from -$5.85 billion in the second quarter to -$9.06 billion in the third quarter.
The results come just hours after the company launched its latest frontier AI model.
Google said the new model, Gemini 4 Carbon, even surpasses its Gemini 4 Argon, launched just two weeks ago. The company claimed that Carbon also beats competing models, including OpenAI’s GPT-6 Astra (OPAI.PVT) and Anthropic’s Claude Opus 5.5 (ANTH.PVT).
According to Google CEO Sundar Pichai, the Gemini app now has over 1 billion users, making it the fastest-growing app in the company’s history.
Wall Street investors, meanwhile, oscillate between worry and exuberance about the future of AI and whether hyperscalers’ vast investments in the technology will pay off.
Those fears were on display last week when traders dumped CoreWeave shares amid questions about the company’s massive debt load, sending large swaths of the market lower.
On Tuesday, Oracle announced that it would be the first company to purchase Google’s AI processors for use in its own data centers.
Dan Ives of Yorkville Ives expressed a bullish view of an otherwise bearish market reaction.
“Doubling cloud versus contracted demand with margin expansion at the same time settles the demand side of the investment debate for this quarter, and TPU systems contributing now rather than next year puts a second growth engine on the ground that other hyperscalers don’t have.”
But Google also faces growing competition from Meta, thanks to its new Muse AI agent. According to Meta CEO Mark Zuckerberg, 10 million people have created Muse, with the majority of users accessing the app for shopping.
If Muse continues to expand its user base and gain traction in online sales, it could prove to be a long-term threat to Google.
“Search usage (and) growth is back in focus given the launch of Muse and the challenges Google may face migrating users to Agent while maintaining strong monetization,” Post wrote.
Gn headline
