GOOG Stock On Track To Erase Over $600B In Market Value In A Month — Analysts Flag Search Slowdown, Margin Pressure

• Alphabet's third-quarter revenue grew 25% to $127.6 billion but missed expectations of $128.2 billion.
• Google Search revenue growth slowed to 12% in Q3 from 17% in the previous quarter.
• Nine brokerages lowered their price targets on Google, with analysts highlighting slowing Search growth, AI monetization challenges and margin pressures.

Google parent Alphabet Inc. (GOOG, GOOGL) is on track to erase more than $600 billion in market value in October after its stock tumbled following Wednesday's disappointing fiscal third-quarter (Q3) earnings report.

According to FiscalAI data, Alphabet's market capitalization fell approximately 15.9% to $3.52 trillion between September 30 and October 29, indicating roughly $665 billion in value erased, 

Read Next

IOVA Stock Heads For Worst Day In Over 17 Months, Retail Says ‘Selling Is Not Done’ – What’s Driving The Fall?

Arnab Paul

As of this writing, GOOG stock traded more than 12% down and was among the top-trending tickers on Stocktwits. The sell-off followed weaker-than-expected Google Search advertising performance and negative free cash flow of $9.1 billion, as capital expenditures reached $51.4 billion. 

Analysts Positive On Google's AI, Cloud Prospects

The company’s Q3 revenue rose 25% year over year to $127.6 billion, missing FiscalAI’s' consensus estimate of $127.9 billion. Google Search revenue growth slowed to 12% year over year from 17% in the previous quarter, with Search revenue reaching $63.35 billion.

According to TheFly, Deutsche Bank said it was "defending the stock," noting that AI was driving Google's strongest Search query growth in five years, including commercial queries, while advertising across new AI experiences was beginning to scale.

JPMorgan viewed Google's Search headwinds as more manageable than permanently structural, noting that management identified foreign exchange as the largest driver of the third-quarter Search growth slowdown.

Rosenblatt expects Google Cloud revenue to surpass Search and YouTube combined by 2028, per TheFly. Meanwhile, BofA raised its 2027 revenue estimate by 11% to $616 billion, incorporating stronger Cloud performance and additional tensor processing unit (TPU) sales.

Wall Street Flags Search Slowdown, Margin Risks

In a note cited by TheFly, KeyBanc said Alphabet's third-quarter results reinforced its concerns about slowing Search growth and near-term margin pressures, potentially creating an air pocket for the stock over the next one to two quarters.

Wedbush expects the sequential slowdown in Search advertising growth to outweigh other developments in the quarter, while Piper Sandler highlighted concerns about lower monetization of AI-powered Search.

While Bernstein acknowledged Google Cloud’s strong growth as TPU sales increased, it flagged potential margin compression and questions about underlying Google Cloud growth.

Morgan Stanley said that faster Search growth and innovation would be important for a stock valuation re-rating.

What Retail Investors Think About GOOG, GOOGL Stock

Despite the bloodbath in Google stock on Thursday, retail investors’ sentiment around GOOG and GOOGL on Stocktwits remained in the ‘extremely bullish’ territory amid high user message volume.

So far this year, GOOG stock has fallen over 10%. By comparison, the Roundhill Magnificent Seven ETF (MAGS) and the Invesco NASDAQ 100 ETF (QQQM), which hold the stock, have risen over 7% and 16%, respectively, over the same period.

See Also: Former Fed Vice Chair Roger Ferguson Sees Potential For A 50-Basis-Point Rate Hike In December

For updates and corrections, email newsroom[at]stocktwits[dot]com.