Alphabet 2026 年第三季度云收入同比增长 103%，自由现金流为负 90.7 亿美元

Alphabet's (Google) key financial metrics for the third quarter of 2026, covering June through September. (Source: Google Blog)

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Alphabet, Google's parent company, reported a surprise doubling of cloud revenue, but its free cash flow (FCF) deficit deepened amid massive investments in artificial intelligence (AI) infrastructure. Shares plunged nearly 10% in after-hours trading after revenue and earnings fell short of market expectations.

Alphabet said on Oct. 28 (local time) that revenue for the third quarter of 2026 reached $127.6 billion. Although revenue increased from a year earlier, it fell short of analysts' expectations of $128.2 billion. Weaker-than-expected revenue from its core advertising business weighed on the results.

Alphabet's third-quarter advertising revenue totaled $82.01 billion, approximately $1.41 billion below market expectations. Although advertising revenue itself did not decline, slowing growth in search advertising heightened investor concerns.

Google Cloud, meanwhile, continued to deliver strong growth. Third-quarter revenue surged 103% year-on-year to $30.71 billion, exceeding market forecasts. Demand from enterprises for AI infrastructure and cloud services appeared to drive the expansion.

Alphabet's third-quarter results by business segment. (Source: Google Earnings Report)

Alphabet's (Google) third-quarter financial results. (Source: Search Engine Roundtable)

Profitability nevertheless deteriorated. Alphabet's third-quarter net income attributable to common shareholders fell approximately 25% year-on-year to $26.17 billion. Earnings per share (EPS) varied depending on the accounting basis, with diluted EPS under generally accepted accounting principles (GAAP) at $2.12 and adjusted EPS at $2.67, below the market forecast of $3.02. Losses on equity investments also contributed to the decline in net income.

Free cash flow of negative $9.07 billion was a particular concern for investors. Alphabet first reported negative free cash flow in the second quarter, and the third-quarter figure marked its second consecutive quarterly deficit, worsening from negative $5.9 billion in the previous quarter. Heavy spending on AI data centers and cloud infrastructure continued to pressure the company's cash generation.

Alphabet's cash consumption was primarily driven by expanding cloud capacity and rising AI research and development costs. The company reported an operating loss of $7.66 billion in its Alphabet-level activities segment, which includes substantial AI research and development (R&D) spending.

Despite the pressure, Alphabet plans to increase AI infrastructure investment. Chief Financial Officer Anat Ashkenazi said, "We expect capital expenditure (CAPEX) to increase significantly in 2027, driven by AI technology development." She also anticipated short-term profitability pressure from the use of external cloud capacity. However, the company maintained its existing full-year capital expenditure outlook for 2026.

Alphabet shares fell nearly 10% in after-hours trading after third-quarter results missed market expectations and cash consumption worsened. (Source: Google Finance)

Meanwhile, Alphabet unveiled its next-generation AI model, Gemini 4 Carbon, on the day of its earnings announcement, emphasizing its AI competitiveness. During the earnings conference call, Alphabet CEO Sundar Pichai highlighted the new model, saying, "Alphabet is once again leading at the frontier of AI." The announcement appeared aimed at easing market concerns about the burden of AI investment, profitability and the company's perceived position in the AI race.

The earnings announcement also highlighted the growing importance of Google Cloud. Google Cloud CEO Thomas Kurian explained during the conference call that sales of Google's proprietary tensor processing units (TPUs) had become a meaningful revenue stream for the cloud business. With Google Cloud revenue surging, the results showed that a business model combining proprietary AI chips with cloud services is emerging as a growth driver.