Alphabet posts strong cloud growth but AI spending pushes free cash flow negative
Alphabet posts strong cloud growth but AI spending pushes free cash flow negative
Alphabet reported third-quarter 2026 revenue of $127.58 billion for the period ended 30 September, up 25% year over year. Net income fell to $26.17 billion from $34.98 billion a year earlier, while earnings per share were $2.12 after an $8.7 billion investment loss reduced EPS by $0.55.
Cloud growth meets heavier spending
Google Cloud revenue rose 103% to $30.7 billion. Search and other advertising revenue increased 12% to $63.3 billion, and YouTube advertising revenue rose 9% to $11.2 billion. Management said demand for AI infrastructure and services was driving cloud growth.
Cash flow and balance sheet
Operating cash flow was $42.3 billion, while capital expenditure reached $51.4 billion, leaving free cash flow of negative $9.1 billion. Alphabet ended the quarter with $265.1 billion in cash, cash equivalents and marketable securities and $125.1 billion in long-term debt, according to its Form 10-Q. The company said capital expenditure will increase significantly in 2027.
The quarter shows a sharp split in Alphabet's operating picture: cloud growth accelerated while advertising growth was slower than some investors expected and infrastructure spending exceeded quarterly operating cash generation. The company also said Gemini had reached one billion users, a management-reported product milestone.
- Whether Google Cloud growth can continue to offset the cost of AI infrastructure.
- Search and YouTube advertising growth after the quarter's deceleration signals.
- The path of capital expenditure and free cash flow into 2027.
- How Alphabet uses its cash and debt capacity while investment remains elevated.
The figures are based on Alphabet's earnings release and SEC filing; consensus figures are third-party estimates. This is not investment advice.
Revenue
$127.6B
↑ +25% y/y Q3 2026
Net income
$26.2B
↓ -$8.8B y/y Q3 2026
Google Cloud
$30.7B
↑ +103% y/y Q3 2026
Free cash flow
-$9.1B
↓ Capex exceeded OCF Q3 2026
Sources
Quarterly revenue, Alphabet
Margins by quarter
Twelve quarters of figures
| Quarter | Q3 '23 | Q4 '23 | Q1 '24 | Q2 '24 | Q3 '24 | Q4 '24 | Q1 '25 | Q2 '25 | Q3 '25 | Q4 '25 | Q1 '26 | Q2 '26 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $76.7B | $86.3B | $80.5B | $84.7B | $88.3B | $96.5B | $90.2B | $96.4B | $102.3B | $113.8B | $109.9B | $119.8B |
| Revenue growth | 11.0% | 13.5% | 15.4% | 13.6% | 15.1% | 11.8% | 12.0% | 13.8% | 16.0% | 18.0% | 21.8% | 24.2% |
| Gross margin | 56.7% | 56.5% | 58.1% | 58.1% | 58.7% | 57.9% | 59.7% | 59.5% | 59.6% | 59.8% | 62.5% | 61.7% |
| Operating margin | 27.8% | 27.5% | 31.6% | 32.4% | 32.3% | 32.1% | 33.9% | 32.4% | 30.5% | 31.6% | 36.1% | 34.0% |
| Net income | $19.7B | $20.7B | $23.7B | $23.6B | $26.3B | $26.5B | $34.5B | $28.2B | $35.0B | $34.5B | $62.6B | $112.2B |
| Diluted EPS | $1.55 | $1.64 | $1.89 | $1.89 | $2.12 | $2.14 | $2.81 | $2.31 | $2.87 | $2.82 | $5.11 | $9.11 |
| Cash from operations | $30.7B | $18.9B | $28.8B | $26.6B | $30.7B | $39.1B | $36.2B | $27.7B | $48.4B | $52.4B | $45.8B | $39.1B |
| Capital expenditure | $8.1B | $11.0B | $12.0B | $13.2B | $13.1B | $14.3B | $17.2B | $22.4B | $24.0B | $27.9B | $35.7B | $44.9B |
| Free cash flow | $22.6B | $7.9B | $16.8B | $13.5B | $17.6B | $24.8B | $19.0B | $5.3B | $24.5B | $24.6B | $10.1B | −$5.9B |
| Dividends and buybacks | $15.8B | $16.2B | $15.7B | $18.2B | $17.7B | $18.0B | $17.5B | $15.8B | $14.4B | $8.0B | $2.5B | $0.0M |
This story describes figures the company has published. It is for information only and is not investment advice or a recommendation to buy, sell or hold any security. Check the original filings before relying on any figure. Stoqly is not affiliated with the SEC or Alphabet.
