A Very Scary Thursday 🎃…

Google had plenty to celebrate after its latest earnings report.

→ Revenue was growing.→ Its cloud business was booming.→ And AI was bringing more people to Search.

Not a bad combination for one of the world’s largest technology companies.

Wall Street, however, had other ideas.

On Thursday, Alphabet $GOOG ( ▼ 1.45% )  plunged 12.6%, wiping nearly $500 billion off its market value.

Quite an expensive disagreement.

And the ripple effect:

→ Nasdaq Composite: Fell 1.4%.
→ S&P 500: Slipped 0.3%.

Alphabet’s enormous size made its decline a significant drag on both indexes.

So how does a company deliver extraordinary growth and still lose nearly half a trillion dollars in a single session?

Let’s dig in. ⇩

SPONSOR BREAK presented by MarketWise*

No. 1 Stock for 2027

There’s a good chance that Elon Musk, Sam Altman, and Jensen Huang NEED this stock to fulfill their ambitions. Which is why Marc Chaikin –who recommended Nvidia before its 21,000% run-up – is predicting this could be the biggest winner of the new year. He’s sharing the name and ticker, free of charge, with no strings attached.

Click here to see why he’s calling this his No. 1 stock idea for 2027.

SPONSOR BREAK presented by Brownstone*

Don’t Make This 401(k) Mistake.

An email announcing a new 401(k) investment option is coming to 70 million inboxes. Most will delete it – and miss what Larry Benedict calls the decade’s biggest opportunity. He’s naming the one ticker to own before it arrives – free.
Watch here.

$500 Billion. Gone…

Here’s what Google’s third quarter looked like:

→ Revenue: $127.6 billion, up 25% year over year.
→ Google Cloud: $30.7 billion, up a remarkable 103%.
→ Earnings per share: $2.12, versus roughly $3.02 expected.
→ Google Search: $63.3 billion, up 12%, but below the $64.9 billion analysts expected.

Plenty of growth. A few rather expensive misses.

And Search was the one investors couldn’t ignore.

It still accounts for roughly half of Alphabet’s revenue, making it the financial engine behind much of Google’s AI expansion.

Meanwhile, reported earnings took an additional hit from an $8.7 billion loss on equity investments, largely reflecting changes in investment values rather than operating expenses.

So the earnings picture wasn’t quite as ugly as the headline suggested.

✱ But the Search slowdown raised a more uncomfortable question.

What happens when Google’s next big thing starts competing with Google’s biggest thing? ↓

SPONSOR BREAK presented by MarketWise*

Every Bubble of His Life Was Caused by the Fed. This One Is Different.

Savings-and-loan. Dot-com. Housing. Dr. Ron Paul watched the Federal Reserve inflate every bubble of the modern era. But this one is different, he’s warning. Because for the first time, the federal government is directly sponsoring it. And what we’re seeing now, he says, is just a foreshadowing of an even greater crisis. Get the full story — and the #1 step to prepare — here.

SPONSOR BREAK presented by MarketWise*

Trump Is Taking America “Public.” Here’s How to Get in Early

Right now, a sitting president is attempting something no president has tried: putting America itself on the market. Louis Navellier, the man who was early to Nvidia, says it adds up to $31.5 trillion. So how does an ordinary person get in? Louis explains it, free, in his new video.
Watch it here.

Google vs. Google…

Google has spent decades perfecting one of the most profitable businesses on the internet.

Someone searches. Google shows an ad. Advertisers pay.

Now Google is introducing AI into the equation.

And there’s a small complication.

AI-powered searches currently generate less advertising revenue per query than traditional searches.

Meanwhile, Google says its search queries are growing at their fastest pace in five years.

More searches. → Slower revenue growth.

→ Q2 Search revenue growth: 17%.
→ Q3 Search revenue growth: 12%.

Management says currency fluctuations were the largest individual reason for the slowdown, with advertising changes and tougher comparisons also contributing.

But the AI question isn’t going away.

Google is pushing users toward a version of Search that currently makes less money per query.

Pichai is betting more AI searches will eventually create more opportunities to monetize.

Wall Street would like proof.

Google is both defending its golden goose and teaching it a new trick.

Quite the competitive landscape.

The question is how much that trick will cost. ↓

$30 Billion Up. $9 Billion Down.

If Google Search is giving Wall Street a headache, Google Cloud has been providing some relief.

And quite a lot of it.

→ Cloud revenue: $30.7 billion, up 103% year over year.
→ Operating profit: $11.1 billion, more than triple the year-earlier figure.
→ Operating margin: 36.2%, up from 23.7%.

That’s a remarkably profitable quarter for a business growing this quickly.

But keeping the AI infrastructure running — and building more of it — comes with a substantial bill.

→ Capital spending: $51.4 billion in the quarter, up 114%.
→ Free cash flow: Negative $9.1 billion.

✱ Free cash flow is the cash left after operating expenses and capital investments.

The negative figure also included a $5.2 billion European Commission fine payment.

Even excluding that payment, free cash flow would have been negative.

And Google isn’t finished spending.

Management maintained its $195–205 billion capital expenditure outlook for 2026, with spending expected to increase significantly again in 2027.

The demand is certainly there.

Google Cloud’s reported backlog — contracted business not yet recognized as revenue — reached $561 billion.

That’s an enormous amount of future business to deliver.

The cloud is making money. Building the cloud is consuming plenty of it.

And after Thursday’s selloff, investors are taking another look at how much they’re paying for both. ↓

Cheap Stock. Expensive Problem?

After losing nearly $500 billion in market value, Alphabet is looking considerably cheaper.

According to Yahoo Finance, Google’s trailing price-to-earnings ratio (P/E) — its share price divided by annual earnings per share — has fallen to its lowest level since 2012.

But…

Alphabet’s reported earnings have been swinging with the value of its investments in companies like SpaceX and Anthropic.

→ Q2: Roughly $99 billion in investment gains.
→ Q3: An $8.7 billion loss on equity investments.

Those accounting swings make the trailing P/E less useful than it first appears.

Looking ahead, some investors see a different picture.

a) At roughly $285 per share, investor Joseph Carlson estimates Alphabet trades at 18.6 times expected 2027 earnings.

He sees the selloff as an overreaction.

b) Gene Munster of Deepwater Asset Management is less convinced, warning that Search growth could slow further.

Following the earnings report, 13 Wall Street analysts lowered their Alphabet price targets, according to Yahoo Finance.

A lower share price can make a stock look cheaper.

Whether the underlying business has become a better value is a considerably more complicated question.

Especially when Google’s biggest competitor may be its OWN next product.

The Next Search Begins…

Wall Street has a few questions it would like Google to answer.

And they’re not particularly complicated.

→ Search: Can AI-powered queries eventually earn as much advertising revenue as traditional searches?

→ Cash flow: Will Google’s enormous infrastructure investments start producing more cash than they consume?

→ Cloud: Can its extraordinary growth continue as new computing capacity comes online?

The next major checkpoint is Alphabet’s fourth-quarter earnings report, expected in February 2027.

Management has also promised more detail on next year’s capital spending.

And there’s another development worth watching.

→ Google is experimenting with new advertising formats inside AI-powered searches, including ads that respond to longer, back-and-forth conversations.

The idea is to make those AI interactions more profitable.

Whether advertisers and users embrace them remains to be seen.

For now, Google has an unusual assignment.

Make Search smarter without making its advertising business less valuable.

Was this email forwarded to you? Don’t miss out on future stories — subscribe using the button below.

Also, help your friends blossom this spring! Share us with them.

💬 We Want To Hear Your Story:

Got a market or stock you want us to analyze next?

Just drop your request in the comments here.

P.S. – If you no longer want to receive occasional emails from us and you want to unsubscribe, click here 👉 “Unsubscribe” . Thank you!