Alphabet Q3 2026: Google Cloud revenue doubled to $30.7B, while capex of $51.4B outran operating cash

Alphabet owns Google: Search, YouTube, Android, Chrome and the subscriptions and devices around them (reported as Google Services), plus Google Cloud, which sells computing capacity, AI models and Workspace to businesses, and now TPU systems, Google’s own AI chips, as hardware. A third segment, Other Bets, earns revenue primarily from autonomous transportation and internet services, per the release. Services still earns most of the operating income: $39,157 million this quarter, against $11,121 million for Cloud.

The gap between those two figures is closing fast, and that is one half of the quarter. The other half is what it costs: the property and equipment line now absorbs more cash than the business produces, which changes how Alphabet finances itself. The sections below take Cloud’s growth and margin first, then Services and the swing below operating income, then the cash gap and how it was covered.

Alphabet Q3 2026 results at a glance

$ millions, except per share	Q3 2026	Q2 2026	Q3 2025
Revenue	127,577	119,796	102,346
Google Services revenue	96,302	94,540	87,052
Google Cloud revenue	30,709	24,768	15,157
Operating income	40,576	40,770	31,228
Google Cloud operating income	11,121	8,814	3,594
Net income available to common	26,170	112,107	34,979
Diluted EPS	$2.12	$9.11	$2.87
Net cash from operating activities	42,290	39,069	48,414
Purchases of property and equipment	51,355	44,924	23,953
Free cash flow	(9,065)	(5,855)	24,461

The Q2 column is from the second-quarter release. Year-ago free cash flow is our arithmetic (operating cash less purchases of property and equipment, the release’s own definition); the other two free cash flow figures are as reported in the reconciliation.

Google Cloud: revenue up 103%, margin 36.2%

Google Cloud revenue rose 103% to $30,709 million, from $15,157 million a year earlier and $24,768 million in Q2, about 24% in a single quarter (our arithmetic). The release attributes the growth to Google Cloud Platform across enterprise AI infrastructure and AI solutions and core GCP services, and says TPU system sales “were also a meaningful contributor”. The segment description, as in the Q2 release, says Cloud generates product revenue “primarily from the sale of TPU systems”. Neither release says how much revenue TPU sales brought in.

Cloud operating income was $11,121 million, against $3,594 million a year earlier, so the segment’s operating margin went to about 36.2% from 23.7%, and from 35.6% in Q2 (our arithmetic). Cloud now accounts for about 24% of Alphabet’s revenue (our arithmetic).

Two lines elsewhere in the filing fit the hardware story without proving it. Inventory rose to $13,308 million at September 30 from $9,991 million at June 30 and $2,439 million at December 31, 2025. And United States revenue grew 39% from a year earlier, against 9% for EMEA and 12% for APAC.

Google Services slowed to 11% growth

Services revenue grew 11% to $96,302 million, down from the 15% growth the Q2 release reported. Google Search & other grew 12% to $63,350 million, and the release says the year-over-year Search query growth rate was the highest in five years. Against Q2’s $63,271 million, Search revenue was almost flat (our arithmetic). YouTube ads rose about 9% to $11,207 million and Google Network about 1% to $7,455 million (our arithmetic); subscriptions, platforms and devices rose about 11% to $14,290 million (our arithmetic).

Services operating income was $39,157 million, a margin of about 40.7%, against 38.5% a year earlier and 41.8% in Q2 (our arithmetic). Traffic acquisition costs were $16,366 million.

Below the segments, costs the release calls Alphabet-level activities, mainly shared AI research and development, rose to $7,655 million from $4,467 million, about 71% (our arithmetic). Other Bets lost $2,047 million. Consolidated operating income rose 30% to $40,576 million, and the operating margin was 31.8%, below the 34.0% of Q2 (our arithmetic).

Why EPS fell while operating income rose 30%

Diluted EPS fell to $2.12 from $2.87, about 26% (our arithmetic), because of what sits below operating income. Other income and expense swung to a net loss of $8,221 million from a gain of $12,759 million a year earlier. Almost all of that was an $8,664 million loss on equity securities, against a $10,734 million gain a year earlier. The release says the equity-securities loss lowered net income by $6.7 billion and diluted EPS by $0.55. Adding the $0.55 back gives about $2.67 (our arithmetic), still below the year-ago $2.87, but that year-ago figure was itself lifted by a gain.

The same line runs in both directions: in Q2 other income was a gain of $97,983 million, which is why Q2 EPS was $9.11. Interest expense rose to $967 million from $143 million as borrowing grew, and $298 million of preferred dividends now comes off net income before it reaches common stockholders.

Capex of $51.4B against $42.3B of operating cash

Cash flow, $ millions	Q4 2025	Q1 2026	Q2 2026	Q3 2026
Net cash from operating activities	52,402	45,790	39,069	42,290
Purchases of property and equipment	27,851	35,674	44,924	51,355
Free cash flow	24,551	10,116	(5,855)	(9,065)

Purchases of property and equipment more than doubled from a year earlier (about +114%) and rose about 14% from Q2 (our arithmetic). They equalled about 40% of revenue and about 1.2 times operating cash flow (our arithmetic). Trailing-twelve-month free cash flow was $19,747 million, as reported. Depreciation of property and equipment rose to $8,369 million from $5,611 million a year earlier, as earlier spending started to reach the income statement.

Operating cash was also lower than a year earlier, $42,290 million against $48,414 million. The release’s cash flow statement shows the working-capital lines behind it, including $3,220 million of cash tied up in inventory and $7,807 million in other assets.

How Alphabet funded the gap

Cash and cash equivalents were roughly unchanged in the quarter, at $56,334 million against $55,911 million at the start, because financing brought in $29,437 million, more than three times the free cash flow gap. In the quarter Alphabet:

• issued senior unsecured notes for net proceeds of $28.7 billion;
• sold 12 million Class A shares for net proceeds of $4.3 billion and 24 million Class C shares for net proceeds of $8.1 billion under its at-the-market program, about $12.4 billion in total (our arithmetic), with $27.6 billion left available under the program;
• repurchased no stock, against $11,504 million of buybacks a year earlier, while paying $2,936 million of dividends.

Long-term debt was $125,102 million at September 30, against $46,547 million at December 31, 2025. Cash, cash equivalents and marketable securities were $265,098 million, against $126,843 million at December 31, 2025, a period that also includes the June equity raise of $49.6 billion described in the Q2 release. Diluted weighted shares were 12,368 million, about 1.4% more than a year earlier (our arithmetic). The board declared a $0.22 quarterly dividend on the common stock.

What to watch in Q4

• Free cash flow. Two negative quarters in a row, at −$5.9 billion and −$9.1 billion. The release gives no capex outlook, so Q4’s spending is the next data point.
• Cloud margin and the product mix. Cloud’s margin was 36.2% with TPU system sales a “meaningful contributor”; the release does not split product from services revenue, and the Form 10-Q may say more.
• Services growth. 11% this quarter against 15% in Q2, with Search revenue flat from Q2.
• Other income. Equity-securities gains and losses swung EPS by $0.55 this quarter and far more in Q2. Operating income is the cleaner series.
• Funding mix. $28.7 billion of notes and $12.4 billion of ATM equity in one quarter, with $27.6 billion of ATM capacity left.

Quick answers

How much did Google Cloud grow in Q3 2026?

Google Cloud revenue rose 103% from a year earlier to $30,709 million, from $15,157 million. Cloud operating income was $11,121 million, against $3,594 million a year earlier.

What were Alphabet’s earnings per share in Q3 2026?

Diluted EPS was $2.12, down from $2.87 a year earlier. The release says an $8.7 billion loss on equity securities reduced diluted EPS by $0.55. Net income available to common stockholders was $26,170 million.

Why was Alphabet’s free cash flow negative in Q3 2026?

Purchases of property and equipment were $51,355 million, more than the $42,290 million of net cash from operating activities, leaving free cash flow of −$9,065 million. It was −$5,855 million in Q2; trailing-twelve-month free cash flow was $19,747 million.

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Sources and method. Every company figure is Alphabet’s own disclosure, read directly from SEC EDGAR and linked above. Third-quarter and year-ago revenue by type, segment revenue and operating income, operating margin, other income detail and the equity-securities effect, net income, EPS and share counts, TAC, headcount, the ATM program, notes issuance and dividends, the September 30 and December 31 balance sheets, the quarterly cash flow statement, the four-quarter free cash flow reconciliation and revenue by geography come from Exhibit 99.1 to the Form 8-K filed 2026-10-28 (accession 0001652044-26-000080) for the quarter ended 2026-09-30. Second-quarter revenue by type, segment results, operating income, net income, EPS, other income, cash flow, the June 30 inventory balance and the June equity raise come from the second-quarter release (Form 8-K, Exhibit 99.1, filed 2026-07-22, accession 0001652044-26-000066). The results were filed with the SEC at 4:01 pm ET on 2026-10-28 (Form 8-K acceptance time on the EDGAR filing index), after the US market closed; the release scheduled its call for 4:30 PM ET the same day.

No consensus estimate is included, so this piece makes no claim that the quarter beat or missed expectations. The release contains no revenue, earnings or capex outlook, so the quarter is judged against the year-ago quarter and Q2. This piece makes no claim about the share-price reaction.

Our arithmetic, labelled as such: Cloud’s 24% growth from Q2 and its 24% share of revenue; segment operating margins (Cloud 36.2%, 35.6% and 23.7%; Services 40.7%, 41.8% and 38.5%); consolidated operating margin of 34.0% in Q2; YouTube ads, Network and subscriptions growth (about 9%, 1% and 11%); the 71% rise in Alphabet-level costs; the 26% fall in diluted EPS and the $2.67 figure with the $0.55 equity-securities effect added back; year-ago free cash flow of $24,461 million; capex growth of about 114% from a year earlier and 14% from Q2, and capex at about 40% of revenue and 1.2 times operating cash flow; the $12.4 billion of ATM proceeds ($4.3 billion + $8.1 billion); financing inflows at more than three times the free cash flow gap ($29,437 million against $9,065 million); Search revenue’s near-flat change from Q2 (+0.1%); and the 1.4% rise in diluted weighted shares. These are approximations, not reported numbers. The 25%, 103%, 11%, 12%, 30%, 31.8% and geographic growth rates are as printed in the release. The interpretation (that Cloud’s growth and margin and the cash gap from capex are the two halves of the quarter, and that the gap was funded with debt and equity) is our analysis, not a company statement or a forecast.

Related: Meta Q2 2026, where capex also squeezed free cash flow; Microsoft Q4 FY2026 and Amazon Q2 2026, the other two large cloud providers we cover.