Why did Alphabet's shares fall after revenue rose 25%?

Alphabet, the parent of Google, grew sales 25% from a year earlier, just short of forecasts. On paper, that looks like a strong quarter, with cloud revenue more than doubling.

But AI spending is heavy. Free cash flow, the cash left after costs and investments, dropped to minus 9.07 billion dollars, far below what analysts had expected.

Earnings per share came in well below forecasts, at 2.12 dollars, against 3.02 expected by analysts. Shares fell by as much as 10 percent after hours.

In the results statement, Sundar Pichai said: We're excited by the range of big opportunities ahead of us. Investors are questioning whether demand for AI will justify that spending.