Alphabet stock faces AI spending test after strong Cloud quarter

Alphabet reported its third-quarter 2026 results on Wednesday, October 28, with strong growth in Cloud and Search but greater pressure from AI investment and marketable-securities losses. The results covered the quarter ended September 30 and were released by Alphabet in a filing with the U.S. Securities and Exchange Commission.

Alphabet stock traded at 260.60 euros on Lang & Schwarz at 13:10 CET on Wednesday, November 11, 2026.

Cloud growth meets investment pressure

Alphabet's consolidated revenue increased 25% from the year-earlier quarter to 127.577 billion US dollars. The company said this marked its 13th consecutive quarter of double-digit revenue growth. Google Services revenue rose 11% to 96.302 billion US dollars, with Google Search and other revenue up 12% to 63.350 billion US dollars.

Google Cloud was the clearest operating growth driver. Revenue climbed 103% to 30.709 billion US dollars from 15.157 billion US dollars a year earlier. Cloud operating income more than tripled to 11.121 billion US dollars from 3.594 billion US dollars, lifting the segment's contribution as enterprise customers increased spending on AI infrastructure, AI solutions and core cloud services. Alphabet also said TPU system sales contributed meaningfully to the expansion.

Management linked the broader product momentum to AI adoption. Chief Executive Sundar Pichai said the Gemini app had reached one billion users and that first-party model APIs were processing nearly 32 billion tokens per minute, more than four times the level of a year earlier. Alphabet also said its year-over-year Search query growth rate was the highest in five years.

The earnings quality was more mixed than the revenue headline. Operating income increased 30% to 40.576 billion US dollars, but net income available to common stockholders fell to 26.170 billion US dollars from 34.979 billion US dollars. Diluted earnings per share declined to 2.12 US dollars from 2.87 US dollars.

A major factor was a 8.664 billion US dollar loss on equity securities in other income and expense. Alphabet said that loss reduced net income by 6.7 billion US dollars and diluted earnings per share by 0.55 US dollars. That investment effect makes the quarter's earnings comparison less representative of the underlying operating performance, although it still affects reported results and investor sentiment.

AI buildout raises cash demands

Capital spending on property and equipment reached 51.355 billion US dollars in the quarter, up from 23.953 billion US dollars a year earlier. Operating cash flow was 42.290 billion US dollars, leaving free cash flow at negative 9.065 billion US dollars under Alphabet's stated definition. The figures put the commercial success of Cloud and AI products alongside the financing demands of expanding technical infrastructure.

Alphabet's balance sheet remained substantial at quarter-end, with cash, cash equivalents and marketable securities totaling 265.098 billion US dollars. At the same time, long-term debt stood at 125.102 billion US dollars, compared with 46.547 billion US dollars at the end of 2025. The financing mix is therefore an important consideration as the company continues to expand capacity.

For shareholders, the next dated cash event is the common-stock dividend of 0.22 US dollars per share. Alphabet said the dividend is payable on December 14, 2026, to shareholders of record on December 7.

US equities remain linked to the wider technology market, reflected in the S&P 500.

Investors will likely focus next on whether Cloud growth, Gemini usage and TPU sales can continue to scale quickly enough to support the infrastructure commitment. Alphabet's next quarterly report should provide the next formal update on revenue conversion, cash generation and the return on AI spending. More news and analyses on Alphabet stock.