According to a report published by Citi, Alphabet's third-quarter results were slightly lower than market expectations, mainly due to the slowdown in search revenue growth, which surpassed the positive impact of GCP revenue accelerating by about 103% year-on-year. Overall revenue of $127.6 billion, up 25% year over year, in line with market expectations; operating profit of 40.6 billion yuan, which was about 6% lower than expected; GAAP earnings per share were $2.12, compared to market expectations of $3.03. Search and other revenue was 63.4 billion yuan, up 12% year on year, and growth slowed by about 480 basis points; YouTube advertising revenue was 11.2 billion yuan, up 9.2% year on year, lower than market expectations of 2%; Google Cloud revenue was 30.7 billion yuan, up 102.6% year over year, higher than expected by about 7%, and backlog orders increased 262% year over year to 561 billion yuan. The bank maintained its “buy” rating and lowered its target price from $447 to $375 to reflect the overall rise in uncertainty. The bank believes that post-quarter market highlights include AI Overview and AI Mode monetization, TPU sales's contribution to revenue, and rising capital expenditure and free cash flow pressure in 2027. The bank acknowledged short-term headwinds, but it still has a constructive view on shares, as increased RSI investment is expected to speed up model iteration, support new product launches, and enhance consumption and corporate monetization.

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