Alphabet earnings fell short of analyst expectations in the third quarter of 2026, despite a 25% rise in revenue. Shares of Google’s parent company fell more than 10% to $289.95 in after-hours trading on October 28 following the results.

Alphabet earnings and the investment loss

Revenue for the July–September quarter reached $127.58 billion, below the $127.97 billion average estimate in a FactSet poll. Net income fell to $26.17 billion from $34.98 billion in the same period a year earlier.

Earnings were $2.12 per share, compared with analyst estimates of around $3.01. The result included an $8.7 billion loss on equity investments that reduced earnings by 55 cents per share.

Cloud growth outpaces advertising

Google Cloud revenue rose 103% year over year to $30.7 billion. CEO Sundar Pichai said AI infrastructure and solutions were major drivers of cloud growth.

Google Cloud’s AI product catalog includes tools for building and deploying models, as well as computing infrastructure for AI workloads.

Google Search and other advertising revenue rose 12% to $63.3 billion, while YouTube advertising revenue increased 9% to $11.2 billion. Pichai also said the Gemini app had reached 1 billion users.

Capital spending outlook

Chief Financial Officer Anat Ashkenazi said Alphabet continues to expect capital expenditures to increase significantly in 2027. She said the company would provide further details on its fourth-quarter earnings call.

Next milestone

Alphabet plans to provide more detail on its 2027 capital spending outlook during its fourth-quarter earnings call.

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