Google (GOOG, GOOGL) reported its third quarter earnings after the bell on Wednesday, missing revenue projections on lower-than-anticipated advertising sales, despite Google Cloud growth of 103%.
Google saw earnings per share (EPS) of $2.12 on revenue of 127.58 billion. Analysts were looking for EPS of $3.01 on revenue of $127.93 billion. Revenue excluding traffic acquisition costs came in at $111.21 billion. Wall Street was anticipating $111.29 billion.
Google’s advertising segment saw sales of $82.01 billion versus expectations of $83.5 billion, while its cloud unit brought in $30.71 billion. Analysts were projecting revenue of $29.1 billion.
Google stock fell more than 8% on the news.
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Google is also burning through its free cash flow, declining from $-5.85 billion in Q2 to -$9.06 billion in Q3.
The results come just hours after the company debuted its latest frontier AI model.
Google said the new model, Gemini 4 Carbon, outpaces even its Gemini 4 Argon, which it released just two weeks ago. The company claimed Carbon also beats out competing models, including OpenAI’s (OPAI.PVT) GPT-6 Astra and Anthropic’s (ANTH.PVT) Claude Opus 5.5.
According to Google CEO Sundar Pichai, the Gemini app now has more than 1 billion users, making it the fastest-growing app in the company’s history.
Investors on Wall Street, meanwhile, have been vacillating between concern and exuberance about the future of AI and whether hyperscalers’ vast investments in the technology will pay off.
Those fears came into focus last week as traders dumped CoreWeave stock amid questions about the company’s massive debt load, sending large swaths of the market lower.
On Tuesday, Oracle announced that it will be the first company to purchase Google’s AI processors for use in its own data centers.
CEO Sundar Pichai addresses the crowd during Google’s annual I/O developers conference in Mountain View, Calif., on May 20, 2025. (Camille Cohen/AFP via Getty Images) · CAMILLE COHEN via Getty Images
But Google is also facing increasing competition from Meta, thanks to its new Muse AI agent. According to Meta CEO Mark Zuckerberg, 10 million people have set up Muse, with the majority of users accessing the app for shopping.
If Muse continues to expand its user base and gain ground in online sales, it could prove to be a long-term threat to Google.
“Search usage [and] growth is back in focus given Muse launch and challenges Google could face in migrating users to agentic while maintaining strong monetization,” Post wrote.
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Email Daniel Howley at dhowley@yahoofinance.com. Follow him on X at @DanielHowley.