TLDR
- Alphabet (GOOGL) stock dropped 9% to $297.02 after hours following Q3 results that missed estimates.
- EPS came in at $2.12 versus the $3.02 consensus, while revenue rose 25% to $127.6 billion.
- Google Cloud revenue more than doubled, with operating profit of $11.1 billion beating forecasts.
- Free cash flow was negative for a second straight quarter, at $9.1 billion, as capex hit $51.4 billion.
- Alphabet expects about $200 billion in capex this year and says spending will rise in 2027.
Alphabet (GOOGL) stock fell 9% to $297.02 in after-hours trading on Wednesday. The drop followed a third quarter report that missed on earnings and revenue. The stock had closed at $321.89 for GOOG earlier in the day.
The slide continued Thursday, with premarket trading showing a 10% decline to $289.39. If the losses hold, the stock will be back in the red for 2026.
Alphabet reported earnings of $2.12 a share. That compares with $2.87 a year ago and a consensus estimate of $3.02. Revenue rose 25% to $127.6 billion, just short of the $128 billion Wall Street wanted.
ALPHABET $GOOGL Q3’26 EARNINGS HIGHLIGHTS
🔹 EPS: $2.12
🔹 Revenue: $127.6B (Est. $128.22B) 🔴; +25% YoY
🔹 Google Cloud Revenue: $30.7B (Est. $29.15B) 🟢
🔹 Search & Other: $63.4B (Est. $64.99B) 🔴
🔹 YouTube Ads: $11.2B (Est. $11.4B) 🔴
🔹 CapEx: $51.4B (Est. $55.2B) 🟢
🔹… pic.twitter.com/adgjWRXUKc— Wall St Engine (@wallstengine) October 28, 2026
Google Cloud was the bright spot. Revenue came in at $30.71 billion, ahead of the $29.1 billion analysts expected. Growth hit 103%, and operating profit reached $11.1 billion versus a $9.8 billion estimate.
Where the Quarter Fell Short
Google Services missed. Operating income in the segment was $39.2 billion, below the $40.8 billion Wall Street was looking for. Advertising sales were $82.01 billion against expectations of $83.5 billion.
CEO Sundar Pichai pointed to foreign exchange as the biggest factor in slower search revenue growth. He also said queries sent to “AI Mode” earn less money for Google. Even so, he called AI agents “an expansion opportunity” for search.
Cash is the other pressure point. Free cash flow was negative $9.1 billion, worse than the negative $5.85 billion in Q2. Capital expenditures reached $51.4 billion in the quarter.
Alphabet expects to spend around $200 billion this year. That implies roughly $68 billion in the fourth quarter. CFO Anat Ashkenazi said spending would “increase significantly” in 2027, and purchase commitments stand at $924 billion.
The company has gone three straight quarters without share buybacks. That is the first time since 2015, according to FactSet. Through the first three quarters, it issued $85.2 billion in debt.
It also raised $42.9 billion from stock sales and $19 billion in mandatory convertible preferred stock. Funding has been a busy line item this year.
Anthropic is part of the picture too. Its IPO prospectus mentions Google 109 times. Anthropic has a $114.5 billion cloud agreement with Google through 2033, and Google will own more than 5% after the IPO.
Product News and Analyst Views
The report came hours after Google launched Gemini 4 Carbon. The company says it beats Gemini 4 Argon, released two weeks ago, as well as GPT-6 Astra and Claude Opus 5.5. The Gemini app now has more than 1 billion users.
Dan Ives of Yorkville Ives took a bullish view. He said cloud doubling on contracted demand, with margins expanding, settles the demand side of the capex debate for the quarter. He also noted TPU systems are contributing now rather than next year.
Competition is getting attention as well. Meta CEO Mark Zuckerberg said 10 million people have set up its new Muse AI agent, mostly for shopping. An analyst said search usage and growth are back in focus.
Last week, traders sold CoreWeave stock over its debt load, which pulled the broader market lower. On Tuesday, Oracle said it will be the first company to buy Google’s AI processors for its own data centers. Alphabet traded at $289.39 premarket Thursday, down 10%.
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