Alphabet shares fall after third-quarter revenue misses estimates

Net income declines after an $8.7 billion loss on equity investments

Alphabet Inc., the Mountain View, California-based parent company of Google, reported third-quarter results that fell short of Wall Street expectations on Wednesday. Its shares declined in after-hours trading despite 25% year-over-year revenue growth.

Revenue for July through September totaled $127.58 billion, 25% above the same period a year earlier.

Analysts on average expected $127.97 billion for the quarter, according to a FactSet poll. Alphabet’s reported revenue was below that benchmark even as the company posted the year-over-year increase.

Net income was $26.17 billion, down from $34.98 billion in the same quarter a year earlier.

Alphabet reported $2.12 per share. An $8.7 billion loss on equity investments affected the results. Analyst estimates were around $3.01 per share, though it was not immediately clear whether Alphabet’s reported earnings per share were comparable to those estimates.

Sundar Pichai, CEO of Google and Alphabet, said in a statement that the quarter was strong. He said Alphabet was “now on a half-trillion dollar revenue run rate. Our deep full stack approach is driving momentum across the business,” pointing to the 25% revenue growth year over year.

Pichai also said the Gemini app, Google’s artificial intelligence assistant, had reached one billion users. He said that made it the fastest-growing product in Google’s history.

Within an hour of Wednesday’s market close, Alphabet shares were down about 9% at $295.20. The after-hours reaction came after the company reported revenue below expectations, lower net income and an $8.7 billion loss on equity investments.