Google Cloud Revenue Doubles to $30.7 Billion, but Alphabet Shares Fall on Spending and a Rare Miss
Cloud grew 103% and Gemini passed one billion users, while capex of $51.4 billion pushed free cash flow negative for a second straight quarter.
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Alphabet said on Oct. 28, 2026 that Google Cloud revenue rose 103% year over year to $30.7 billion in the third quarter. Even so, Alphabet shares fell more than 10% in extended trading. Total revenue and profit missed Wall Street estimates, and capital spending of $51.4 billion exceeded the cash generated by the business.
Google's Toronto office. Raysonho @ Open Grid Scheduler / Grid Engine, CC0, via Wikimedia Commons.
Cloud is the standout
In its earnings release, Alphabet credited Cloud's growth to Google Cloud Platform, spanning enterprise AI infrastructure, enterprise AI solutions and core GCP services. It said sales of TPU systems, its custom AI chips, were also a meaningful contributor.
Cloud operating income rose to $11.1 billion from $3.6 billion a year earlier. CFO Anat Ashkenazi told analysts that Cloud's backlog stood at $561 billion. She said the company expects to recognize just over 55% of it as revenue over the next 24 months.
| Q3 2026 | Revenue | Change Y/Y |
|---|---|---|
| Alphabet total | $127.6B | +25% |
| Google Services | $96.3B | +11% |
| Google Cloud | $30.7B | +103% |
AI usage keeps climbing
CEO Sundar Pichai said Google's first-party model APIs now process nearly 32 billion tokens per minute. He said that's 40% more than last quarter and more than four times the volume of a year ago. The Gemini app has reached one billion users, which he called the fastest-growing product in Google's history.
Pichai also said Search query growth is at its highest rate in five years. Search & other revenue grew 12%.
Capex and cash flow
Alphabet's filing shows purchases of property and equipment of $51.4 billion in the quarter. That compares with $44.9 billion in the second quarter and $24.0 billion a year earlier. The spending outran operating cash flow of $42.3 billion, which left free cash flow at negative $9.1 billion. Free cash flow was also negative in the second quarter, at $5.9 billion.
Ashkenazi said the company's 2026 capex guidance of $195 billion to $205 billion is unchanged. "We continue to expect our capex to increase significantly in 2027," she said, adding that the company will give more details on its fourth-quarter call. She also warned of near-term pressure on Cloud margins as Google uses third-party compute capacity to meet demand.
Why the stock fell
Revenue of $127.6 billion came in just under the LSEG consensus of $128.2 billion, according to CNBC and Reuters. Adjusted earnings per share were $2.67, well short of the $3.02 analysts expected. CNBC called it the company's first miss on both revenue and earnings in nearly four years.
Net income fell to $26.2 billion from $35.0 billion a year earlier. The filing shows a swing in other income and expense, from a $12.8 billion gain to an $8.2 billion loss. Reuters said Google's advertising revenue of $82.0 billion was also below expectations.
Investing.com reported that the shares fell 10.42% after hours, to $288.35.
What to watch
The quarter shows how much demand for AI infrastructure has grown, and how much it costs to build. Key markers for the next report are Alphabet's 2027 capex figure, how fast the $561 billion backlog turns into revenue, and whether free cash flow turns positive again. For more on cloud and AI spending, see our Artificial Intelligence hub.
How we reported this
We verified the financial figures against Alphabet's third-quarter earnings release filed with the SEC. The AI usage numbers come from Pichai's published remarks. The CFO's guidance and the market reaction come from CNBC, Reuters and an earnings-call transcript. We removed figures from an earlier draft that we could not trace to these sources.
Sources
- Google, "Q3 2026 earnings call: Remarks from our CEO," Oct. 28, 2026: https://blog.google/company-news/inside-google/message-ceo/alphabet-earnings-q3-2026/
- Alphabet, "Alphabet Announces Third Quarter 2026 Results," SEC Form 8-K Exhibit 99.1: https://www.sec.gov/Archives/edgar/data/0001652044/000165204426000080/googexhibit991q32026.htm
- CNBC, "Alphabet sinks 10% as it holds 2026 capex unchanged, expects significant increase in 2027," Oct. 28, 2026: https://www.cnbc.com/2026/10/28/alphabet-googl-earnings-q3-2026.html
- Reuters via Investing.com, "Alphabet shares fall after revenue miss, cash burn worsens," Oct. 28, 2026: https://www.investing.com/news/stock-market-news/alphabets-heavy-cloud-spending-drives-biggerthanexpected-cash-burn-4980612
- Alphabet Q3 2026 earnings call transcript (Stock Analysis): https://stockanalysis.com/stocks/googl/transcripts/712854-q3-2026/
- Investing.com, "Earnings call transcript: Alphabet Q3 2026 profit miss sparks 10% after-hours drop": https://www.investing.com/news/transcripts/earnings-call-transcript-alphabet-q3-2026-profit-miss-sparks-10-afterhours-drop-93CH-4981037
DailyMech used AI tools to help research and draft this article; it was fact-checked by our editors.