Alphabet's Search, YouTube Shortfall Signals Slower Ad Growth, UBS Says

01:26 PM EDT, 10/29/2026 (MT Newswires) -- Alphabet's (GOOGL) weaker-than-expected Search and YouTube revenue, along with a cautious approach to monetizing AI-driven queries, point to slower advertising growth than anticipated, UBS Securities said in a note Thursday. UBS said Search revenue of $63.4 billion and YouTube revenue of $11.2 billion fell short of Street forecasts of $64.9 billion and $11.4 billion, respectively. It added that management's cautious tone on monetizing AI-driven queries points to a lower advertising revenue growth trend. Cloud revenue beat the Street but came in below UBS's estimate because some capacity will not come online until the end of Q3. Flat quarter-on-quarter cloud margins despite higher external TPU sales undercut the view that Alphabet can earn unusually high margins on hardware, according to the note. The investment firm said more than $100 billion in TPU revenue expected in 2027 could weigh on investor expectations for earnings and free cash flow. It said Amazon (AMZN) and Meta (META) offer a more favorable risk-reward balance. UBS maintained its neutral rating on Alphabet and cut its price target to $332 from $380. Price: 283.77, Change: -41.12, Percent Change: -12.66