$GOOGL · Schwab Network · 2026-10-29

Google Alphabet is now down 12 percent.

except for the cloud, which is their place of power; But clearly AI has both good and bad sides for this company. cloud is up 103 percent, which is a big driver.

Yet it is heading for the biggest revenue decline in Alphabet's history. Currently, this is their biggest negative reaction to earnings since going public in 2004.

Because as you mentioned, in many cases the targets have failed to be achieved. EPS is 2.12, which is much lower than $3.02. The revenue target was also not achieved.

Revenue from search fell short of forecasts, even though search queries grew at the fastest pace in 5 years. And free cash flow was a big issue, $9.07 billion negative. This was the second consecutive quarter of negative revenue and far below the $2.7 billion expected by analysts.

The company maintained its capital expenditure (CapEx) between $195 and $205 billion , although free cash flow was much more negative than expected. So, Sam, that puts about $ 500 billion in market capitalization at risk today.

If the market closes in its current state , it would be the second- largest one-day loss ever for a US-listed company.

So, they would have to drop about 15% to surpass Nvidia's record , but right now we're down a little over 12%.

Citizens has lowered its share rating from 'outperform' to 'market perform'. They also did not give a price target and said that the slowdown in search growth from the second to third quarter was worrying.

Although their query growth has reached a 5- year high , monetization has been challenged due to the difficult search environment. Citizens believes that effective transition from AI overview to agent monetization will require skilled management.

And with increasing competition from agents , Google faces significant operational risks in terms of conversion.

Barclays lowered their price target to $405 from $425. However, they kept it at an ' overweight' rating even after the report. They say that Google Search is facing tough competition and that they are facing a temporary problem, partly due to the AI mode.

They say, however, that they believe Alphabet can overcome this situation.

And TD Coyne lowered their price target from 485 to 460. So, not a huge reduction, but they are maintaining a 'buy' rating. Moffett Nathanson has reduced their target from 370 to 347 , but sorry not 370, they are maintaining a 'buy' rating.

Piper Sandler lowered their target from 400 to 345, but maintained an ' overweight' rating. BofA lowered their target from 430 to 380 and they also maintained a 'buy' rating.

JPMorgan slashed price target from 425 to 375 , but maintained ' overweight' rating , Sam.

Revenue from the cloud more than doubled to $ 31 billion. Gemini has 1 billion users. But there are big concerns about search, big concerns about negative free cash flow, and spending is not coming down at all.

So there's a lot to understand here for Alphabet, which is probably the biggest downside for them in the post-earnings period.

Yes, definitely. Yes, there is a 12% price drop right now. I was listening to some traders yesterday who were saying that Google Alphabet's performance before this report might have told us what the market was feeling.

However, I think they failed to achieve their goals on many fronts.

Yes, if I had to choose one to bet on, it would be Cloud. That's all I'll say. So, I think this is good.

In terms of the market as a whole, when you look at capital expenditure, I think it's positive and perhaps reaffirms the position that AI construction is here to stay. So, we are monitoring this very closely from a portfolio management perspective.

Maybe I'm trying to understand the matter. This is clearly a difficult environment for the stock market with oil prices and interest rates so high. So, it's a challenging situation now.

Of course, we will monitor the results as the situation improves. However, this is a big event. It's big news to see Google face such a big drop in price today. And I look forward to seeing what happens next with the stock.

I think the capital they are raising through the sale of shares is setting the limit for the stock's upside. We are seeing many companies doing this now because interest rates are so high.

Therefore, it is imposing a limit on the rise of equity. So, I think these big mega-cap companies are going to sell some of their shares. This actually limits the potential for upside. So, this is something to consider here.

But the main thing is that Google is matching their words with their actions. They believe in the future. I think it's the right decision to continue investing in their cloud services.

This is their best business for the future. This is their best place to grow. So, in my opinion, this is the right move and it will be profitable in the long run.

But being optimistic in the long term does n't mean we can ignore these daily fluctuations. This does not mean that we can ignore the risks of companies. So, this is a curious situation.

For example, if I were to say that , we might turn around here , but we might not be back to all-time highs anytime soon. There may be a limit on the upside as the share sale process continues.

So, I would look at a December call spread of 285-300. It was around 6.20 this morning. The stock is now slightly higher as it has turned around a bit. I'm not expecting a return to $400, but a return to $300 would be a very good return for this trade.

This is a better payout for me than a two-to-one ratio. So, I like this risk- reward ratio.