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Alphabet Q3: Cloud doubles, free cash flow turns negative

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Alphabet's quarterly revenue rose 25% to $127.6 billion and Google Cloud more than doubled. Spending on AI infrastructure pushed free cash flow negative, and the stock fell 8-10% after hours.

By: Mikola Máté Patrik · · 2 min read

Alphabet 2026 Q3 Earnings title card from Google
Image: Google · Press kit · Header image from Sundar Pichai's earnings remarks on the Google blog · Source

The numbers

Alphabet reported third-quarter results on Wednesday (CNBC). Revenue reached $127.6 billion, up 25% year over year, but earnings per share came in at $2.67 versus $3.02 expected. Shares fell 8-10% in extended trading.

  • Google Cloud: $30.7 billion, up 103%.
  • Search: $63.35 billion, up 12%, a slowing pace.
  • Quarterly capex: $51.36 billion, with $195-205 billion guided for the full year.
  • Free cash flow: negative $9.07 billion. Long-term debt rose to $125.1 billion.
  • Equity holdings produced an $8.66 billion loss.

The company said capex will increase significantly in 2027. CNBC puts the figure above $300 billion.

Gemini and AI Search

Sundar Pichai said the Gemini app passed 1 billion users. The API processes about 32 billion tokens per minute, up 40% quarter over quarter and four times a year ago (Google). Gemini 4 Carbon leads the Artificial Analysis index with 59 points.

Ads in AI Mode are expanding internationally (TechCrunch). AI Mode queries are three times longer than classic searches, one in five is multimodal and visual searches reach 50 billion a month.

Why it matters

The quarter shows the price of the AI race: Cloud and Gemini are growing, but Google now spends more on data centers than it generates in free cash. For developers that is good news in the short term: aggressive capacity building points to a more stable Gemini API and competitive pricing.

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