Alphabet shares plummet after revenue miss

Google parent Alphabet on Wednesday missed Wall Street profit and revenue expectations, and AI spending accelerated its cash burn, sending its shares down more than 10 percent in extended trading. Capital expenditures, driven by AI, will increase significantly in 2027, said Chief Financial Officer Anat Ashkenazi, adding that this year's capex forecast was unchanged. She said she also expected near-term margin pressure from the use of third-party cloud capacity. The tech giant reported negative free cash flow of US$9.07 billion, compared with analyst expectations that it would come close to breaking even, according to data compiled by LSEG. The results reflect the huge costs of the AI buildout, with investors in the sector concerned both by potential overspending and the risk of falling behind rivals by not spending enough. The quarterly cash burn is an increase from US$5.9 billion in the prior quarter, which was the first time the company went into the negative in its 22-year history as a public company. Alphabet's cash burn was driven by spending to boost cloud capacity and fund AI research. It reported a US$7.66 billion operating income loss in "Alphabet-level activities," which it said primarily reflected expenses related to AI research and development. The tech giant's total revenue for...