Alphabet stock jumps 4% after posting strong results, boosting AI spend

Alphabet's stock experienced a notable 4% increase on Thursday following the company's impressive third-quarter financial results, which exceeded expectations across the board. The parent company of Google has revised its capital expenditure forecast for artificial intelligence infrastructure, raising it to a range of $91-$93 billion, up from $85 billion previously. This adjustment reflects robust demand within their cloud services. During the earnings call, CEO Sundar Pichai revealed that Google Cloud had a substantial backlog of $155 billion at the end of the quarter. CFO Anat Ashkenazi indicated that they anticipate a significant rise in capital expenditures looking ahead to 2026, which further underscores the company's commitment to AI. Analysts from Deutsche Bank noted that the earnings report showed no significant flaws, highlighting that the stock had already risen 43% since the previous quarter's earnings release. Alphabet's third-quarter earnings came in at $3.10 per adjusted share on revenues reaching an all-time high of $102.35 billion. This marks the first time the company has surpassed the $100 billion revenue threshold in a single quarter, with analysts initially predicting earnings of $2.33 per share and revenues of $99.89 billion. The strong financial performance and an increase in capital expenditures have solidified Alphabet's status as a leader in the AI sector. Goldman Sachs remarked that Alphabet has successfully navigated various concerns related to AI over the past year, maintaining a positive outlook on its operational strengths. As a result, they raised their price target for the stock from $288 to $330. Market analysts are also keenly observing the impact of AI on Google’s search operations, where the company holds a dominant position. Google's search revenue for the quarter reached $56.56 billion, reflecting a 15% year-over-year growth. JPMorgan analysts commented that while the transition to AI in search had initially posed risks, emerging evidence suggests it may present more opportunities than threats, leading them to adjust their price target for Alphabet from $300 to $340.