Powering an old alarm clock LCD (need to invert DC to 3 V AC)
You identified the LCD as being multiplexed—which it very likely is—so the AC you're seeing is probably just some segment being sequenced.
A microcontroller toggling pins in succession will indeed produce AC, however calling &quot;x V AC&quot; that is an extreme red herring.  It is better described as a multiplexed signal with such a frequency and some voltage (amplitude, not AC voltage as measured by a meter).
Atmel's app note AVR340: Direct Driving of LCD Using General
Purpose IO may be of use to you.  This portion describes the &quot;AC&quot; that you're seeing and shows why.


To energize a segment, the waveform to that segment must be 180 degrees out of phase with its COM waveform.  The voltage difference between the segment and COM signals will therefore be typically 5 Volts AC, which causes the segment to become visible after 300-400 msec of refresh cycles.
To de-energize (turn off) a segment, the COM and segment waveforms should be in phase with each other while that segment’s COM is active, that is, not at 2.5 volts.  So, a LCD with all segments OFF will have the segment inputs IN PHASE with each COM input.  (COM3 was omitted from Figure 2-2, since only 4 channels were available.)