Alphabet Misses on Earnings as Google Cloud More Than Doubles and Shares Fall

Alphabet reported third quarter 2026 results that missed Wall Street estimates on revenue and earnings, even as Google Cloud revenue more than doubled. The company posted revenue of $127.58 billion, up 24.7 percent from a year earlier, and GAAP earnings per share of $2.12, below the consensus estimate of $3.01.

The earnings figure was $0.89 below the estimate and down from $2.87 a year earlier, according to figures reported by Seeking Alpha and Barron's. Revenue missed the consensus estimate by about $330 million. Shares fell more than 6 percent in extended trading after the release, Reuters reported, and Barron's put the after hours fall at 8.5 percent to $297.11.

Cloud was the clear bright spot

Google Cloud revenue more than doubled to $30.71 billion, ahead of an analysts' average estimate of $29.57 billion that was based on a 95.1 percent increase, Reuters reported. The cloud unit booked an operating profit of $11.1 billion, above the $9.8 billion analysts had expected, according to Barron's.

The rest of the business came in softer than expected. Google Services operating income was $39.2 billion, missing the $40.8 billion expected. Google Search and other revenue was $63.35 billion, below a forecast of $64.96 billion, and advertising revenue was $82.01 billion, missing an $83.5 billion estimate.

Cash flow turned negative again

Alphabet reported negative free cash flow of $9.07 billion. Analysts had expected a cash burn of $36 million, according to LSEG data cited by Reuters. It was the second straight quarter of negative free cash flow for the company.

Capital spending on property and equipment reached $51.4 billion in the quarter, against operating cash flow of $42.3 billion. Operating income rose 30 percent to $40.58 billion, with an operating margin of 31.8 percent. A net loss on equity securities of $8.7 billion reduced net income and diluted earnings per share.

Alphabet also said its Gemini app has reached 1 billion users. That figure was announced with the results and reported by CTech.

The numbers in full

Revenue was $127.58 billion, a rise of 24.7 percent from a year earlier, and the miss against consensus was about $330 million. Earnings per share were $2.12 against an estimate of $3.01, a gap of $0.89, and the figure was lower than the $2.87 reported a year earlier. Operating income was $40.58 billion, up 30 percent, and the operating margin was 31.8 percent. Cloud revenue was $30.71 billion against an estimate of $29.57 billion, and cloud operating profit was $11.1 billion against an estimate of $9.8 billion. Google Services operating income was $39.2 billion against $40.8 billion expected. Search and other revenue was $63.35 billion against a forecast of $64.96 billion, and advertising revenue was $82.01 billion against an estimate of $83.5 billion. Capital spending was $51.4 billion, operating cash flow was $42.3 billion, and free cash flow was negative $9.07 billion against an expected cash burn of $36 million.

The quarter leaves a mixed picture in one report. Cloud growth beat estimates by a wide margin and cloud profit beat estimates as well. Revenue, earnings per share, search revenue, advertising revenue and Google Services income all missed estimates, and free cash flow was sharply negative while capital spending stayed high.