Despite the strong showing from its cloud business, investors sold off and Alphabet’s after-hours stock price dropped more than 11% following the release of its quarterly results. The drop wiped out more than $280 billion in market value.

Aptus Capital Advisors head of equity and portfolio manager David Wagner wrote that Google Cloud did what it was supposed to this quarter. “The problem is everything else,” wrote Wagner.

Investors are concerned about sluggish growth in Google’s search business, amid fears it might be swallowed up by “AI cannibalizing the franchise,” Wagner wrote. Google Search rose 12% to $63.4 billion, a marked slowdown from 17% growth in the second quarter and 19% in the first. Analysts were expecting the search business to grow 15%.

Tech analyst Dan Ives remained characteristically bullish in a first-take note from his Yorkville Ives equity research. “This is the Cloud print we have been waiting for, and in our view it matters more than a lighter Search number the bears will lean on tonight,” wrote Ives.

Alphabet reported third-quarter revenue of $127.6 billion, up 25% from $102.3 billion a year earlier, roughly in line with the $127.9 billion analysts were expecting, according to consensus estimates from S&P Global Visible Alpha. Earnings tumbled to $2.12 a share from $2.87. The drop is due to an $8.7 billion paper loss on Alphabet’s equity investments, which trimmed its earnings by 55 cents per share. Meanwhile, operating income rose 30% from a year ago, but dipped slightly to $40.6 billion compared to $40.8 billion last quarter.

“We had a strong quarter and are now on a half-trillion dollar revenue run rate,” said Alphabet CEO Sundar Pichai in a statement. “Our deep full stack approach is driving momentum across the business, with Alphabet revenues growing 25% year-over year.”

As for capital spending, investors are eagerly awaiting the figure among all the hyperscalers as the sizzling race for AI compute has pressed companies to splash out $2 trillion in two years. Alphabet reported that capex was $51.4 billion in the third quarter, compared to $24 billion a year ago. The company confirmed its full-year capital spending forecast and capex is expected to reach $200 billion in 2026, and then rise to $300 billion in 2027. Chief financial officer Anat Ashkenazi said more details on capex would be forthcoming in the fourth quarter.

Independent tech analyst Luke Lango wrote in a note immediately after Alphabet announced its results that investors were dumping stock for the wrong reason, namely that the paper loss reflects Alphabet’s stake in SpaceX. Lango called it “accounting noise,” rather than a core problem with the business.

“Alphabet is now funding the AI buildout with shareholders’ money instead of its own cash,” wrote Lango. “That’s what the market is punishing tonight. But make no mistake: this is a ‘how do we pay for it’ problem not a ‘nobody wants it’ problem.”

The third quarter results are Alphabet’s first full results since the tech giant announced it raised $84.8 billion in equity in June, including $10 billion from Berkshire Hathaway, to fund an AI buildout. The heavy spending has pushed Alphabet’s free cash flow into negative territory, clocking in at negative $9.1 billion, compared to negative $5.9 billion in the second quarter.

Melissa Otto, global head of Visible Alpha Research at S&P Global, wrote in a note that investors have worried that Google Cloud’s profit margin had peaked last quarter but it widened to 36.2%.