Google doubled its cloud on AI — and still burned $9.1 billion

Alphabet reported third-quarter revenue of $127.6 billion, up 25% from a year earlier, while Google Cloud revenue more than doubled to $30.7 billion on demand for AI infrastructure — yet shares fell by as much as 8% in after-hours trading.

The cash side is why: capital spending reached $51.4 billion, more than double the $24 billion spent in the same quarter last year, pushing free cash flow to negative $9.1 billion, deeper than the negative $5.9 billion of the previous quarter.

Earnings fell to $2.12 a share from $2.87, including an $8.7 billion paper loss on equity investments, even as operating income rose 30% to $40.6 billion — and chief executive Sundar Pichai still called it a strong quarter on a half-trillion-dollar revenue run rate.