Alphabet, the parent company of Google, has released its Q3 2026 earnings report, showing weaker-than-expected earnings that caused its stock (GOOGL: Nasdaq) to plummet 11% in after-hours.
According to the report, revenue came in at $127.6 billion. Even though the figure represented a 25% year-over-year (YoY) increase and a 6% quarter-over-quarter (QoQ) increase, it still missed analysts’ estimates of $128.22 billion.
Earnings per share (EPS) came in at $2.12, also falling short of the $3.01-$3.02 forecasts. EPS was also down 77% QoQ and down 26% YoY.
Among Google’s suite of products, Google Cloud stood out after experiencing 103% growth to $30.71 billion against the projected $29.15 billion.
Meanwhile, Search and YouTube ads missed their marks, bringing in $63.4 billion and $11.2 billion against an estimated $64.99 billion and $11.4 billion.
Generally, Google Services revenue missed the projected $98.42 billion, attaining $96.3 billion instead.
Capital expenditures (CapEx) hit $51.4 billion, which was better than the forecasted $55.2 billion.
Results were weighed down by heavy AI spending, with Google posting a $7.66 billion operating loss. The company noted that this capital was directed to scaling AI research and development, including entities like Google DeepMind.
Sentiment was also pulled down by the massive $8.7 billion equity loss, which reduced EPS by $0.55.
Notably, Google posted an operating cash flow of $42.3 billion, hugely missing the estimated $52.72 billion. It also registered a free cash flow of $9.1 billion, higher than the estimated $2.7 billion and pointing to possible underinvestment in critical infrastructure.
In terms of dividends, Google posted $0.22 per share, up from $0.20 in 2024. Finally, the company saw zero stock repurchases over that quarter.
Google CEO Sundar Pichai highlighted that progress pointed to a “half-trillion annual revenue run rate” following yearly revenue growth.
“On top of that, the Gemini app has reached one billion users—making it the fastest-growing product in Google’s history—and we surpassed 150 million YouTube Music and Premium subscribers globally, including trials.”
In after-hours trading, Google stock was priced at $289.75, having crashed 10.82%. Its one-year performance stood out as the most positive, posting gains of 15.42%.
Even with today’s negative performance, analysts’ average recommendation is a “buy,” with a target price of $426.60.
Source: MarketWatch
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