Alphabet Q3 Results: Cloud Surges Past $30bn with AI Demand
Alphabet reported a 25% increase in consolidated third-quarter revenue to US$127.6bn, marking its 13th consecutive quarter of double-digit top-line expansion.
Operating income rose 30% to US$40.6bn, expanding operating margins to 31.8%.
The quarter, however, revealed a widening divergence between cash generation and headline earnings.
Despite robust operational trading, net income available to common stockholders slipped from US$35.0bn to US$26.2bn, bringing diluted earnings per share down to US$2.12 from US$2.87 a year earlier.
The drop was driven by other income and expense swings, which fell to a net expense of US$8.2bn following an US$8.7bn loss on equity securities.
On an earnings call, Anat Ashkenazi, CFO of Alphabet, notes: “CapEx was US$51.4bn in the third quarter with the vast majority of the spend in technical infrastructure to support our investments in AI.
“Approximately 65% of our investments in technical infrastructure in Q3 was related to servers and networking equipment, which generally have useful lives of six years.
“The remaining 35% was for data centers, which have useful lives of seven to 40 years.
“We're in a unique position to be able to monetise our AI investments across many products that reach billions of users and enterprises.
“Our AI investments in Search are driving our highest query growth in half a decade.
“Google Cloud has generated tens of billions of dollars in AI revenues year‑to‑date, and Google One is our fastest‑growing subscription product, driven by demand for AI plans.
“Throughout this investment cycle, we expect to generate an attractive ROIC that remains meaningfully above our cost of capital and anticipate generating strong cash flow from operations.”
- Total assets are over US$1tn
- Revenues increased 25% to US$127.6bn
- Google Cloud revenue increased 103% to US$30.7bn
- Consolidated operating income increased by 30%
- Q3 2027 marks Alphabet’s 13th consecutive quarter of double-digit revenue growth
Cloud momentum and search strength
The standout operational driver was Google Cloud, where revenue surged 103% year on year to US$30.7bn.
Operating profit for the division more than tripled to US$11.1bn, up from US$3.6bn in the third quarter of 2025.
Google Services revenue climbed 11% to US$96.3bn, underpinned by 12% growth in Search and other revenue to US$63.4bn.
YouTube advertising added US$11.2bn, while subscriptions, platforms and devices contributed US$14.3bn.
Sundar Pichai, CEO of Google and Alphabet, notes: “We had a strong quarter and are now on a half-trillion dollar revenue run rate. Our deep full stack approach is driving momentum across the business, with Alphabet revenues growing 25% year-over year.
“Our Al investments are driving overall Search query growth, including commercial queries. In fact, our year-over-year query growth rate is the highest it's been in the last five years.
“Google Cloud revenues grew 103%, powered by huge demand for our Al infrastructure and Al solutions. We're also seeing strong demand for our TPU systems across a wide range of customers.
“We're excited by the range of big opportunities ahead of us."
Capital allocation and liquidity shifts
To finance its infrastructure expansion, Alphabet tapped capital markets aggressively during the quarter.
The company secured US$28.7bn in net proceeds from issuing senior unsecured notes, alongside US$12.4bn raised via its at-the-market equity programme through sales of Class A and Class C stock.
Our Al investments are driving overall Search query growth, including commercial queries. In fact, our year-over-year query growth rate is the highest it's been in the last five years.”
Top partners
- NVIDIA: Google Cloud runs NVIDIA accelerators alongside its own TPUs, including the Vera Rubin platform, and was among the first clouds to offer Vera Rubin racks in 2026.
- Broadcom: Broadcom works with Google on TPU silicon. An April 2026 agreement between Anthropic, Google and Broadcom covers multiple gigawatts of next-generation TPU capacity from 2027.
- Blackstone: In May 2026 Blackstone committed an initial $5bn of equity to a joint venture with Google creating a new TPU cloud, targeting 500MW of capacity online in 2027.
- Goldman Sachs: Part of a ten-bank syndicate, with Barclays, BNP Paribas, SMBC and Scotiabank, lining up a $22bn loan in September 2026 to fund TPU purchases for the Blackstone and Google venture.
- Apple: In January 2026 Apple and Google agreed a multi-year deal under which the next generation of Apple Foundation Models will be based on Gemini, supporting a revamped Siri.
