theSIGNAL BUSINESS
29 October 2026
"The market can stay irrational longer than you can stay solvent."
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Business

Alphabet Doubles Its Spending, and Investors Flinch

A $4tn company posted 25% revenue growth, yet its shares fell more than 10% as capital spending outran profit.

Revenue rose 25% to $127.6bn, and Google Cloud more than doubled. Even so, Alphabet's shares fell by more than 10% in after-hours trading on Wednesday, erasing tens of billions of dollars from a company valued at $4tn. The explanation lies in the gap between the top line and the bottom line.

Net profit fell 25% to $26.2bn in the July-to-September quarter, well short of analysts' forecasts. Part of the damage was an $8.7bn loss on equity investments, which Alphabet blamed on its stake in SpaceX, whose shares have struggled since it went public in June.

Meanwhile, the core advertising machine is slowing. Advertising revenue grew 11% to $82bn, and search growth eased from 17% to 12%. YouTube advertising rose 9%, down from 13% a quarter earlier, although the platform is now the most-watched content provider on American television screens. The brightest spot was Google Cloud, where revenue jumped 103% to $30.

7bn and operating income tripled to $11.1bn. Sales of Google's in-house AI chips, known as TPUs, contributed significantly. Alphabet is also selling them to outside companies, a growing challenge to Nvidia, and OpenAI reportedly plans to buy some.

The cost of this ambition is striking.

Photo: Taylor Vick / Unsplash
Rows of servers inside a datacenter, the kind of infrastructure now consuming Alphabet's record capital spending.
💸
$195bn–$205bn
Alphabet's forecast capital spending for 2026
Discuss
  • Alphabet's revenue grew 25% yet its shares fell over 10%. Why might growth alone fail to satisfy investors?
  • Google Cloud revenue rose 103% thanks partly to TPU chips. How could this change Nvidia's position in the AI market?
Business

Fed Holds Rates, But December Looms

The Federal Reserve left its benchmark rate untouched this week, yet markets barely exhaled. Traders are now pricing in a December increase, because inflation has proved far stickier than policymakers hoped. The pause, then, looks less like relief than a held breath.…
  • If a pause signals a hike ahead, is holding rates really a decision at all?
Business

Europe's "Made in Europe" Rule Splits Allies

Seventy-three percent of Turkey's car exports go to the EU, worth $30.1 billion last year. Yet a Franco-German compromise on the Industrial Accelerator Act would let Britain and Norway qualify as "European" while excluding Turkey. The rule demands 70% European content, excluding batteries. Researcher Tommaso Pardi notes that average European-made EVs already reach about 83%, so the threshold looks generous.…
  • If European content is already 83%, who does the 70% rule really target?
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I would broadly think of all of this as a long-range planning process, not a short-term allocation exercise.
Sundar Pichai, CEO of Google
AMERICAS · Business
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ASIA · Business
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EUROPE · Business
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GLOBAL · Business
Super-rich get ‘double dividend’ from causes and costs of climate crisis, report finds
theSIGNAL IN THE LAB
IVOCABULARY
erasingwell short of
stakecapital expendituresticky
borrowing coststhreshold
IIGRAMMAR FOCUS
Dependent prepositions — verb/adjective + preposition patterns
Many verbs and adjectives are followed by a fixed preposition that must be learned as part of the word (e.g. blame something on, compare with, depend on). The wrong preposition sounds unnatural, even if the meaning is still clear.
on · in · for · to · from · of · with
  1. Alphabet blamed its $8.7bn investment loss its stake in SpaceX, whose shares have struggled since the June listing.
  2. Investors are being asked to pay a huge spending programme before the returns are fully visible.
  3. Net profit was well short analysts' forecasts, and shares fell more than 10% after hours.
  4. Sundar Pichai described the spending as long-range planning, but some investors are sceptical that explanation.
  5. Google's in-house chips are a growing challenge Nvidia, which has long dominated the market.
  6. Traders are now pricing in a rate rise because inflation has proved resistant the Fed's efforts to bring it down.
IIIPHRASAL VERBS
Match the phrasal verb to its definition. All six appear in today’s articles.
  1. to move from one level or state to another (shares ___ after hours; "fell by more than 10%")
  2. to become less intense, rapid or severe ("search growth ___ from 17% to 12%")
  3. to be forced or pushed to a higher level ("borrowing costs elsewhere are often forced ___")
  4. to start to place a price on something in anticipation of a future event ("traders are now ___ a December increase")
  5. to leave something unchanged or take no action on it ("left its benchmark rate ___")
IVCRITICAL THINKING
Three of today's stories (Alphabet's earnings, the Fed's pause and the EU content rule) all involve decisions whose true significance lies in what they signal about the future rather than what they do today. Choose one and explain what the market, central banks or trading partners are really being told. Who benefits from keeping that message ambiguous?
VCREATIVE · HEADLINES
Write a headline for the top story in each of the following styles. One line each, no explanation:
  • TABLOID NEWSPAPER
  • LUXURY MAGAZINE
  • ACTIVIST BLOG
VIWRITING
Alphabet's SpaceX stake lost $8.7bn in value, while Waymo lost $2bn despite 500,000 paid rides a week. Write a short paragraph (80-100 words) explaining why a company's investments in other ventures can distort how its overall performance is judged.
VIIDEGREES OF EXTREMITY
Complete each ladder from mild to strong.
  • Shares dipped→→
  • Profit missed forecasts slightly→→
  • Growth is easing→→
  • Spending rose noticeably→→
  • Inflation is a little stubborn→→
  • Revenue increased→→
VIIISPEAKING
  1. Alphabet lost billions on a SpaceX stake. Should big firms invest outside their core business?
  2. Waymo gives 500,000 paid rides weekly but still loses money. Is that sustainable?
  3. Would you rather use YouTube or traditional television? What does that say about media's future?
  4. Higher US rates push up borrowing costs abroad. Is it fair that one country sets the pace?