Alphabet slides about 8% after hours as Q3 EPS of $2.12 misses despite Google Cloud revenue more than doubling
Revenue rose 25% to $127.6 billion and Google Cloud grew 103%, but an $8.7 billion loss on equity securities, $51.4 billion of quarterly capex and negative free cash flow overshadowed the quarter.
Alphabet (GOOGL) reported third-quarter results after the close on Wednesday. Sales were roughly in line with forecasts, but earnings per share came in far below what analysts expected.
| Item | Q3 2026 | Year ago | Note |
|---|---|---|---|
| Revenue | $127.6B (+25%) | $102.3B | about in line with consensus |
| Diluted EPS (GAAP) | $2.12 | $2.87 | consensus about $3.00 |
| Operating income | $40.6B (31.8% margin) | $31.2B | +30% |
| Google Search & other | $63.4B (+12%) | $56.6B | growth slower than Cloud |
| YouTube ads | $11.2B (+9%) | $10.3B | single-digit growth |
| Google Cloud | $30.7B (+103%) | $15.2B | operating income $11.1B |
| Capital expenditures | $51.4B | $24.0B | $132.0B year to date |
Why the miss: The company booked an $8.7 billion net loss on equity securities, which it said cut net income by $6.7 billion, or $0.55 a share. Even adding that back, EPS would still trail the roughly $3 consensus. Operations themselves were strong: Cloud, helped by TPU system sales, now earns more than a third of Alphabet’s operating profit.
Why it matters: Capex more than doubled from a year ago and pushed quarterly free cash flow to -$9.1 billion. Alphabet bought back no stock in the quarter, raised $12.4 billion by selling shares under an at-the-market program and issued $28.7 billion of notes. That is a sharp change in how the AI build-out is financed.
Market reaction: The stock closed the regular session up 1.3% at $324.89, then fell roughly 7% to 9% in extended trading (Class C shares were down 8.7% per Yahoo Finance).
WMR data: Before the report, GOOGL was already 19.2% below its high and down 5.2% over the past month, with volume running 1.9 times normal on Wednesday (WMR close data, Oct. 28). Follow the stock at /en/topics/alphabet/.
Next: Management commentary on 2026-2027 capex on the earnings call, Thursday’s regular-session close, and Amazon’s AWS results on Thursday.
Sources
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