Alphabet Q3 Revenue Rises 25% to $127.6 Billion as Google Cloud Sales Jump 103%
Cloud operating income tripled to $11.1 billion, while Search growth slowed to 12% and free cash flow turned negative.
Photo: Asoundd / CC BY-SA 4.0 via Wikimedia Commons
Alphabet reported third-quarter 2026 revenue of $127.6 billion on Wednesday, up 25% from a year earlier, driven by a 103% increase in Google Cloud sales to $30.7 billion, according to its earnings release filed with the U.S. Securities and Exchange Commission.
The numbers
- Net income: $26.2 billion available to common stockholders.
- Diluted EPS: $2.12, down from $2.87 a year earlier.
- Google Cloud: revenue of $30.7 billion, with operating income of $11.1 billion versus $3.6 billion a year ago. Alphabet said sales of its TPU systems were a meaningful contributor to growth.
- Google Search & other: $63.4 billion, up 12%.
- YouTube ads: $11.2 billion, up about 9% from $10.3 billion.
- Capital spending: $51.4 billion in the quarter, versus $24.0 billion a year earlier.
- Free cash flow: negative $9.1 billion for the quarter.
Google Cloud's growth has accelerated through the year. Alphabet reported growth of 63% in the first quarter and 82% in the second.
Search and AI
Search growth slowed from the 17% reported in the second quarter and 19% in the first, TechCrunch reported. Alphabet said year-over-year query growth was the highest in five years. CEO Sundar Pichai said in the release that "Our AI investments are driving overall Search query growth, including commercial queries," and that the company is "now on a half-trillion dollar revenue run rate."
On the earnings call, chief business officer Philipp Schindler said Google is expanding ads in AI Mode to international markets, which he described as taking its "monetization footprint global for the first time," according to TechCrunch. Google also introduced multi-turn ads in AI Mode in the U.S.
Why it matters
The results show how much of the AI infrastructure build-out is now flowing into cloud revenue, and how quickly spending is rising to support it. Capital expenditure more than doubled year over year, pushing quarterly free cash flow below zero. Alphabet shares fell about 8% after the report, TechCrunch said.
Earlier-year comparisons for net income and EPS are affected by the prior-year quarter; Alphabet's filing should be consulted for the detailed reconciliation.
