Alphabet Inc., the parent company of Google, reported a third-quarter earnings miss that sent its stock down 2% in after-hours trading on Monday.

The Mountain View, Calif.-based company

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 reported net income of $7.07 billion, or $10.12 a share, compared with $13.06 a share in the year-ago period. Revenue was $40.5 billion, up 20% from the same quarter a year ago. Analysts surveyed by FactSet had estimated earnings of $12.28 a share on revenue of $40.3 billion.

Most of the earnings shortfall was tied to an equity investments loss of $1.5 billion during the quarter, Dave Heger, a senior-equity analyst at Edward Jones, told MarketWatch.

Google properties led the way in revenue with $28.65 billion, up 19% from $24.05 billion in the year-ago quarter. Google ad revenue improved 17% to $33.9 billion. The company also announced a repurchase of up to an additional $25 billion of its Class C stock.

Read more: Antitrust fears muted as Amazon, Apple, Google and Facebook approach earnings

Alphabet, which had reportedly made an offer to acquire smartwatch company Fitbit Inc., reported traffic-acquisition costs of nearly $7.5 billion, higher than the $7.4 billion estimated by FactSet.

Capital expenditures increased to $6.73 billion from $5.28 billion in the year-ago quarter as the company triples its sales force in cloud and expands operations in Silicon Valley and Seattle.

Google’s “other revenue,” which includes hardware like its Pixel phones and cloud products, jumped 39% to $6.43 billion. Alphabet said revenue from “other bets,” including subsidiaries outside of Google like the self-driving car company Waymo, were up slightly year-over-year at $155 million.

Read more: Google’s cloud business is sky high heading into earnings

“I am extremely pleased with the progress we made across the board in the third quarter, from our recent advancements in search and quantum computing to our strong revenue growth driven by mobile search, YouTube and Cloud,” Google Chief Executive Sundar Pichai said in a statement announcing the results.

In a conference call with analysts later, Pichai outlined cloud partnerships with the Mayo Clinic and others, but offered no financial details. Google Chief Financial Officer Ruth Porat vaguely noted “significant growth” for cloud in each geographic region.

During its second-quarter conference call in July, Google said its cloud computing business is on an $8 billion revenue run rate, which means cloud sales have doubled in less than 18 months.

Google’s gains have led to “severe competition” that has eroded growth rates for market leader Inc.

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  and Microsoft Corp.

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 in the global public cloud services market, which is projected to grow to $221.6 billion in 2019 and reach $344.9 billion by 2022, according to research firm Gartner.

Microsoft did stun by winning a 10-year, $10 billion cloud-computing deal with the Pentagon late Friday.

Read more: Microsoft wins Pentagon’s $10 billion JEDI cloud contract, beating Amazon

Google’s earnings miss may be the least of its long-term concerns. The company is the focus of a Department of Justice investigation into its business practices that could lead to antitrust regulation.

When pressed by one analyst about government oversight, Pichai said Google would continue to expand products and services for consumers and businesses of all sizes. That, in turn, could lead to competitive concerns from other companies, he added.

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