Key financial results
- Alphabet reported consolidated revenues of $127.6 billion, representing a 25% increase year-over-year.
Consolidated revenues were $127.6 billion, up 25% in both reported and constant currency.
- Operating income increased 30% to $40.6 billion, with an operating margin of 31.8%.
Operating income increased 30% to $40.6 billion, and operating margin was 31.8%.
- The company generated $42.3 billion in operating cash flow during the third quarter.
- CapEx for the quarter was $51.4 billion, with the majority of spending directed toward technical infrastructure.
- The company ended the quarter with $265.1 billion in cash and marketable securities and $125.1 billion in long-term debt.
We ended the quarter with $265.1 billion in cash and marketable securities, which includes $90.4 billion of marketable equity securities.
- Net income and earnings per share decreased due to an unrealized loss from the company's investment in SpaceX.
Net income and earnings per share decreased due to the decline in OI&E.
- Management did not provide specific share repurchase figures on the call.
Business segment results
- Google Services: Google Services revenues grew 11% to $96.3 billion, with operating income of $39.2 billion.
Google Services revenues increased 11% to $96.3 billion, reflecting strong growth in search and subscriptions.
- Search: Search and other advertising revenues increased 12% to $63.3 billion, led by retail and finance.
Google Search and other advertising revenues increased by 12% to $63.3 billion with retail driving the largest contribution followed by finance.
- YouTube: YouTube advertising revenues rose 9% to $11.2 billion, with notable strength in living room watch time.
YouTube advertising revenues increased 9% to $11.2 billion, with brand driving the largest contribution and notable strength in living room.
- Network: Network advertising revenues were $7.5 billion, up 1%.
Network advertising revenues of $7.5 billion were up 1%.
- Subscriptions: Subscription platforms and devices revenues increased 11% to $14.3 billion, driven by YouTube Music and Premium.
- Google Cloud: Google Cloud revenues grew 103% to $30.7 billion, with operating income of $11.1 billion.
- Other Bets: Other Bets reported $372 million in revenue and an operating loss of $2 billion.
Capital allocation
- The Board of Directors declared a quarterly cash dividend of $0.22 per share payable in December.
Our Board of Directors declared a quarterly cash dividend on our common stock of $0.22 per share, which is payable in December.
- The company has future purchase commitments of $924 billion and pre-commencement leases and other obligations of $152 billion.
At the end of the third quarter, we had future purchase commitments of $924 billion and pre-commencement leases and other obligations of $152 billion.
- Management did not discuss specific share buyback programs on the call.
Industry trends and dynamics
- AI investments are driving the highest query growth rate in the last 5 years.
In fact, our year-over-year query growth rate is the highest it's been in the last 5 years.
- User search behavior is shifting toward longer, personalized, and multimodal queries.
Queries in AI mode are on average 3x longer than traditional searches and 1 in 5 AI mode searches globally use voice images or documents.
- The cybersecurity landscape is driving strong demand for AI-powered security platforms.
The growing risk of cybersecurity threats is also driving strong demand for our AI-powered security platform.
Competitive landscape
- The company is expanding partnerships with major firms including American Express, Unity, and Oracle.
- Management noted that the company competes with various firms while simultaneously providing them with platform services.
You've seen us work on our models with other companies, including Apple with whom we compete in many, many areas.
- The company is broadening distribution of its TPU systems to other providers and customer data centers.
Macroeconomic environment
- Foreign exchange rates acted as a slight headwind on year-over-year growth rates during the third quarter.
- The company paid a $5.2 billion cash payment related to a 2018 EC fine.
Growth opportunities and strategies
- The company is focused on scaling agentic experiences across its products, including Search and the Gemini app.
- YouTube is leveraging its creator ecosystem and subscription services to drive growth.
Subscriptions continue to grow faster than ads led by YouTube Music premium.
- Waymo continues to expand its autonomous driving operations in the U.S. and internationally.
Financial guidance and outlook
- Management expects slightly larger FX headwinds to consolidated revenues in Q4.
At current spot rates, we would expect a slightly larger FX headwinds to our consolidated revenues in Q4 relative to the prior quarter.
- The company expects TPU system sales to continue scaling in Q4 with a meaningful revenue ramp in 2027.
In Google Cloud, we expect TPU system sales to continue to scale in Q4, followed by a meaningful revenue ramp in 2027.
- Full year 2026 CapEx guidance remains unchanged at $195 billion to $205 billion.
Our full year 2026 CapEx guidance range of $195 billion to $205 billion remain unchanged.
- Cloud margins are expected to face near-term headwinds due to the utilization of third-party compute capacity.
We expect margin headwinds in the near term as we utilize this capacity.
AI and Agentic Strategy
- The company announced the Gemini 4 series, including Argon and Carbon models.
Today, we announced Carbon. It's our strongest fronter model with state-of-the-art cybersecurity and long horizon capabilities.
- The Gemini app has reached 1 billion users.
The Gemini app is now at 1 billion users and is the fastest-growing product in Google's history.
- The company is developing agentic commerce tools like the Universal Commerce protocol.
The Universal Commerce protocol, UCP, is being rapidly adopted by retailers.
- Internal productivity has increased due to the deployment of AI models for coding.
Teams across chrome, ads and search have used Argon to write and optimize code much faster, shipping 35% more code with 30% fewer errors.
Technical Infrastructure and TPU Systems
- TPU system sales are a meaningful contributor to revenue and involve a complete system of hardware and software.
- The company builds inventory for TPU systems only after signing contracts with customers.
We only do that after we have signed contracts. So all of the inventory that for TPU systems are associated with committed contracts.
- The company is optimizing software to improve portability, including support for PyTorch.
Recently, we introduced, for example, PyTorch, which opens up a much larger market for us by optimizing PyTorch.
Q3 2026 results
| Metric | Result | Change |
|---|---|---|
| Consolidated Revenue | $127.6 billion | Up 25% |
| Google Cloud Revenue | $30.7 billion | Up 103% |
| Google Search and Other Advertising Revenue | $63.3 billion | Up 12% |
| Operating Income | $40.6 billion | Up 30% |
| Operating Margin | 31.8% | Not stated |
How management sounded
Positive (+45 on our -100 to +100 scale). Management expressed high confidence in their full stack AI approach, citing record cloud growth and the fastest query growth in five years, though they acknowledged supply constraints and FX headwinds. Management sounded more upbeat than on 27% of the 194 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.
Read the analyst Q&A summary and guidance and outlook for this call.
What to watch before the next call
- The impact of third-party compute capacity utilization on cloud margins in Q4.
- The revenue ramp of TPU system sales heading into 2027.
- The rollout of agentic experiences to the broader consumer base via the Gemini app.
Earlier calls
- Q2 2026 (Jul 22, 2026), tone Positive: Alphabet reported 24% revenue growth to $119.8 billion, with Cloud revenue up 82% and Search up 17%. Management raised full-year CapEx guidance to $195 billion to $205 billion to meet AI demand, while declaring a $0.22 per share dividend.
