Google Search Revenue Miss Drove Alphabet's Third-Quarter Top-Line Shortfall, BofA Says

12:04 PM EDT, 10/29/2026 (MT Newswires) -- Alphabet's (GOOG, GOOGL) Google search revenue miss drove the third-quarter top-line shortfall as more people used artificial intelligence-powered summaries that appear at the top of search results, BofA Securities said in a note Thursday. The Google parent reported consolidated revenue of $127.58 billion late Wednesday, below the FactSet-polled consensus estimates. Annual search growth of 12% trailed the 15% rate projected by Wall Street, BofA said. "The search miss could heighten concerns around the impact from transition of search traffic to AI formats, advertisers shifting budgets to competitors, and pressure from competing agentic offerings," BofA analysts Justin Post and Nitin Bansal said in a note. Alphabet's class A and class C shares plunged about 12% each in Thursday trading. AI investments drove year-over-year query growth to its fastest pace in five years, Alphabet and Google Chief Executive Sundar Pichai said during an earnings call on Wednesday, according to a FactSet transcript. The third-quarter search slowdown stems largely from comparison dynamics and unmonetized international AI Overviews, BofA said. "Growth could decelerate further through (the first quarter of 2027) on tougher comps," Post and Bansal wrote. The brokerage lowered its price target on Google's stock to $380 from $430 and reiterated its buy rating. The company maintained its 2026 capital expenditure guidance of $195 billion to $205 billion and expects it to "increase significantly" in 2027, Chief Financial Officer Anat Ashkenazi said on the call. Microsoft (MSFT), which reported better-than-expected first-quarter results late Wednesday, cut its capex outlook to about $170 billion for the 2026 calendar year. Amazon.com (AMZN), another major cloud player, is scheduled to release its financials after markets close Thursday. Price: 284.76, Change: -37.14, Percent Change: -11.54