Alphabet reported a slight revenue miss and a significant EPS shortfall for the third quarter 2026. While core advertising remained resilient with search query growth hitting a five-year high, the bottom line was pressured by a $8.7 billion non-operating loss on equity securities and surging infrastructure costs. Google Cloud emerged as a major strength, more than doubling its revenue to over $30 billion.
Key Highlights
- Google Cloud revenue surged 103% YoY to $30.7 billion, surpassing analyst expectations of $29.5 billion.
- Capital expenditures reached $51.4 billion for the quarter, driving quarterly free cash flow into negative territory at -$9.1 billion.
- Google Search & other revenue grew 12% to $63.4 billion, supported by the highest query growth rate in five years.
- Total operating income increased 30% to $40.6 billion, maintaining an operating margin of 31.8% despite heavy AI investment.