$GOOGL · Parkev Tatevosian, CFA · 2026-11-04

Alphabet announced its quarterly financial results, causing its share price to fall by more than 10%. Of course, there were many concerns, including negative free cash flow resulting from massive spending on artificial intelligence, a slowdown in the growth rate of search engine activity, and many other factors that worried investors.

So, this is what I aim to do in this in-depth analysis that will extend over several days here on YouTube, where I will cover the company’s results, delve into the details, and understand and explain what I think and what is going on regarding Google’s stock after the company announced its quarterly financial results.

The company’s 25% revenue growth rate did not impress investors, as total sales reached a massive level with annual revenues of half a trillion dollars. Investors are unimpressed by the amount of money Alphabet has to spend to achieve this growth.

The management team stated that the year-on-year growth rate of searches is the highest it has been in 5 years. But the growth in search engine revenue has slowed considerably.

If people are searching more than ever before, why are revenues slowing down? The administration said the reason is that people are searching more using artificial intelligence mode, which does not generate sufficient financial returns.

The management team has been testing certain systems and methods to monetize interaction with the AI environment, and this has not been fully optimized for maximum financial benefit, has it?

Reaching effective levels of profitability in Google.

This is why search engine revenues have slowed down; Because more people are engaging in a form of research that does not generate as much revenue as traditional Google search engine results might.

Right now, Alphabet's biggest bright spot is Google Cloud, where revenues have grown by 103%.

This is where the company makes its money from artificial intelligence, and this is the kind of revenue growth rates you would want to see as a shareholder when the company you own spends nearly $200 billion in 2026 alone.

You want to see these numbers to justify all this spending, and we see these kinds of numbers to justify these levels of investment. A new and growing category of growth for Alphabet is its chip sales.

They call their chips TPUs, while Nvidia calls them GPUs. They are seeing strong demand for these chips across a wide range of customers, and they expect this to continue as they expand.

Many companies do not need the most expensive and sophisticated options; they are happy to use an alternative that Alphabet provides for customers who want something other than Nvidia.

Something that offers a balance between price and performance, right?

You don't just want something cheaper that doesn't give you the desired value. You want something less expensive but good value, which Alphabet says it achieves with its TPU units.

As for its large language models, they are used very extensively. Its model APIs now process 32 billion code per minute, up 40% from the previous quarter and more than four times that of the same time last year.

Again, what we are looking for is a justification for spending up to $200 billion. When you have a sector that your customers are using at four times the rate of last year, this justifies continuing to spend in it given the enormous and insatiable demand from your customers.

What is a company if not a group of individuals who create products and services to serve their customers? And that's exactly what Alphabet is doing here. They sense a demand from their customers for a particular product and service, and they are keen to be able to meet that demand.

They want to satisfy their customers. They don't want to tell their customers that they are out of stock and do not have this product. Or go to the competitors to buy it. This is not what they want to do.

They want to provide that product to serve their customers, and that's why they spend a lot of money.

In fact, the Gemini app has now reached one billion users, making it the fastest-growing product in Google's history. So, these are several points of evidence that I, as a contributor, have observed.

I have owned Alphabet shares since 2020. This makes me accepting of the hundreds of billions of dollars they spend here.

If you ask me for details and precision, I would say that I want them to adjust their spending to match the cash flow generated by the company so that they do not have to sell shares and reduce shareholders' stakes.

But here we get into the finer details and become selective. In general, I like it when a company demonstrates to me an effective allocation of capital and finds the right area to inject more of it.

So I want to see them do more of that, and that's what I see with their model.