Google Q3 Earnings: Cloud Business Surges 103% to Record High, but Net Profit Plummets 25%, Causing Stock to Drop Nearly 10% After Hours

BlockBeats news, October 29 — Google parent company Alphabet released its third-quarter 2026 financial report in the early hours of today, Beijing time. The company's quarterly revenue was $127.6 billion, up 25% year-over-year, marking its 13th consecutive quarter of double-digit growth, with annualized revenue run rate reaching $500 billion.

However, this revenue level was slightly below Wall Street expectations, while net profit declined significantly year-over-year, and the overall financial report fell short of market expectations.

From a business structure perspective, Google Cloud became the biggest highlight, with quarterly revenue up 103% year-over-year to $30.7 billion, setting a record growth rate, mainly driven by demand for enterprise AI infrastructure, AI solutions, and TPU-related businesses.

By comparison, Google Services revenue grew 11% to $96.3 billion, of which search and other advertising revenue grew 12% year-over-year, and YouTube advertising revenue grew about 9% to $11.2 billion.

The company said search query volume growth year-over-year was the highest in nearly five years, with AI-related features providing some boost to usage. Profitability pressure was more evident. Net profit attributable to common shareholders for the quarter was $26.2 billion, down about 25% year-over-year, with earnings per share of $2.12. The profit decline was mainly affected by losses on equity securities investments (related losses of about $8.7 billion for the quarter), while the same period last year saw significant gains from this item.

Operating profit grew 30% year-over-year to $40.6 billion, with operating margin rising to 31.8%, indicating that core business operations remained in growth, but overall net profit was significantly dragged down by investment gains and losses.

At the same time, the company's capital expenditures remained high, with negative free cash flow for the quarter. The full-year capital expenditure guidance remains in the range of $195 billion to $205 billion, reflecting the company's continued increase in AI infrastructure investment. High-intensity spending combined with investment losses caused profitability and cash flow performance to fall below previous market expectations. After the financial report was released,

Alphabet's stock price fell 9.84% in after-hours trading. The market on one hand recognized the rapid growth of the cloud business and the overall revenue's strong expansion, while on the other hand expressed concerns about revenue and profit slightly missing expectations, slowing advertising business growth, and cash flow pressure from high capital expenditures.