Alphabet Q3 Revenue Hits $127.6B, Missing Wall Street Estimates

Alphabet reported third-quarter 2026 revenue of $127.6 billion, falling short of the $128.2 billion forecast by analysts.

The tech giant recorded a net income of $26.17 billion, a 25% decline year over year. This resulted in earnings per share of $2.12, missing the expected $3.02. A net loss of $8.7 billion on equity securities weighed on the bottom line.

YouTube advertising revenue reached $11.21 billion, marking a 9.2% increase from the prior year. This growth rate lags the 15% expansion seen in the same period last year and the 11% and 13% growth rates recorded in the first and second quarters of 2026. Total advertising revenue across Google stood at $80.0 billion, up 10.6%.

Google Cloud emerged as the strongest segment, with revenue surging 103% to $30.7 billion. CEO Sundar Pichai stated the division is now operating on a half-trillion dollar revenue run rate. He attributed the momentum to the company's full-stack approach and noted that AI investments are driving Search query growth at the fastest pace in five years.

Subscription services continued to drive growth beyond advertising. YouTube Music and Premium passed 150 million subscribers globally in the quarter, including trials. Philipp Schindler, Google's chief business officer, noted that subscription revenue is now growing faster than advertising on the platform. The service had previously crossed 125 million subscribers in March 2025.

Pichai announced that the Gemini AI app has reached 1 billion users, calling it the fastest-growing product in Google's history. The company also unveiled more than 30 new products at a recent event in New York, including a custom feed feature for user-selected topics.

Capital expenditures for the quarter totaled $51.36 billion, a 114% increase from the previous year. Alphabet maintains its full-year 2026 capital spending guidance between $195 billion and $205 billion. CFO Anat Ashkenazi indicated that capital spending is expected to rise substantially in 2027.