Alphabet Q3 revenue rises 25% to $127.6 billion as Cloud doubles, but profit falls

Google parent Alphabet reported third-quarter 2026 results after the U.S. market close on October 28: revenue for the quarter ended September 30 was $127.577 billion, up 25% from $102.346 billion a year earlier, its 13th consecutive quarter of double-digit growth, but slightly below the market consensus of $128.22 billion.

Cloud doubles; Search and YouTube grow steadily

Google Cloud was the standout: revenue of $30.709 billion, up 103%, with operating income rising to $11.121 billion from $3.594 billion a year earlier. The company attributed growth to demand for enterprise AI infrastructure and AI solutions and core Google Cloud Platform services, with TPU system sales also contributing significantly.

Google Services revenue reached $96.302 billion, up 11%. Search and other revenue rose 12% to $63.35 billion, with the company saying year-over-year growth in search queries was the highest in five years; YouTube advertising revenue grew 9% to $11.207 billion, and subscriptions, platforms and devices rose 11% to $14.29 billion. Group operating income rose 30% to $40.576 billion, a margin of 31.8%.

Investment losses drag profit; capital spending hits a new high

Despite stronger operating profit, net income available to common stockholders fell to $26.17 billion, or $2.12 per diluted share, from $34.979 billion, or $2.87, a year earlier. Other income swung to a net expense of $8.221 billion from income of $12.759 billion, including a net loss on equity securities of $8.664 billion versus a net gain of $10.734 billion a year earlier; that loss reduced diluted earnings per share by about $0.55.

AI build-out spending kept climbing: capital expenditures reached $51.36 billion, far above $24.0 billion a year earlier, and free cash flow was negative $9.07 billion, negative for a second straight quarter. Chief Executive Sundar Pichai said the company is now on a half-trillion-dollar revenue run rate.

What comes next

Alphabet shares fell sharply in after-hours trading, down 9.36% to $294.49 as of 5:08 p.m. EDT, after closing the regular session at $324.89. Investors will now look to management commentary on the earnings call for the return on AI investment, the durability of Cloud growth, and whether capital spending stays above operating cash flow in the fourth quarter.