Google Cloud Revenue More Than Doubles as Alphabet Posts Record Sales, but Stock Falls on Profit Miss

Alphabet reported third-quarter 2026 results after markets closed on October 28, posting consolidated revenue of $127.6 billion, up 25% from a year earlier. The company said it was the 13th straight quarter of double-digit revenue growth, with gains spread across advertising, subscriptions and cloud computing.

The standout was Google Cloud, whose revenue more than doubled, rising 103% year over year to $30.7 billion. The company attributed the jump to enterprise demand for AI infrastructure and growing sales of its own Tensor Processing Unit (TPU) chips, which businesses are using to train and run AI models as an alternative to Nvidia hardware.

Despite the strong top-line numbers, investors reacted negatively. Alphabet shares fell sharply in after-hours and premarket trading, with reports putting the drop at roughly 7% to 10%. CNBC described it as the company's first quarter in nearly four years to miss both revenue and profit expectations on a consensus basis, even though total revenue came in only slightly below the average analyst estimate.

A bigger factor in the selloff was cash flow. Alphabet reported negative free cash flow of about $9.1 billion for the quarter, far worse than analysts had anticipated, as the company kept pouring money into data centers, chips and other AI infrastructure. Net income was also weighed down by an unrealized loss on one of its equity investments.

Alphabet held its 2026 capital spending forecast steady on the call but signaled that spending would rise significantly again in 2027, extending a trend seen across the largest technology companies this earnings season as they continue to bet heavily on AI infrastructure build-outs.

The results underscore a split that is becoming common among big tech earnings this quarter: rapid growth in AI-driven cloud revenue is real and accelerating, but the enormous capital spending required to support it is increasingly unsettling investors looking for a clearer path to near-term profit.