Alphabet reported Q3 2026 results on October 28 and held its earnings call at 4:30 PM ET. Three businesses stood out: Google Cloud, YouTube, and the core ad business. Together they describe one company that is spending heavily on infrastructure and collecting the returns in cloud, streaming, and ads.
The headline numbers
Revenue: $127.6B, up 25%.
Google Services: $96.3B, up 11%.
Operating income: $40.6B, up 30%, for a 31.8% operating margin.
Net income: $26.2B. EPS was $2.12, down from $2.87, because of an $8.2B swing in other income and expense, including an unrealized loss tied to SpaceX.
Infrastructure: Google Cloud is now the growth engine
Google Cloud revenue was $30.7B, up 103%. Operating income reached $11.1B, a 36.2% margin, and more than tripled from a year earlier.
The cloud backlog grew to $561B, up from $514B in Q2. About 55% of it is expected to be recognized over the next 24 months. On the call, CFO Anat Ashkenazi said Q3 capex was $51.4B and that capex will increase significantly in 2027. Free cash flow was negative $9.1B in the quarter, though trailing-twelve-month free cash flow was still $19.7B and operating cash flow was $42.3B.
Two numbers need context. Purchase commitments are $924B, which is the maximum contractual amount and includes flexible pricing. Pre-commencement leases and obligations total $152B. Roughly 65% of infrastructure spending goes to servers and networking, which have six-year useful lives. The other 35% goes to data centers, which have 7 to 40-year lives.
On the hardware side, other cost of revenues rose 32%, driven by TPU hardware costs. Management said TPU system sales will scale in Q4, with a meaningful Cloud ramp in 2027. Google also said about 100 companies are now TPU customers, including Anthropic and Apple.
Streaming: YouTube's living-room share
The living room accounted for more than one-third of YouTube ad revenue in Q3. YouTube ads were $11.2B, up 9%. YouTube Music and Premium passed 150M subscribers, and subscriptions are growing faster than ads. Amazon is joining YouTube Shopping, so creators will be able to tag Amazon products.
The slowdown in ad growth has a clear cause. Q2 was lifted by the FIFA World Cup, and media and entertainment spending normalized in Q3, as Philipp Schindler noted on the call. Comparing Q3 to Q2 without that adjustment overstates the drop.
Digital ads: still the profit base
Google advertising revenue was $82.0B, up 11%. Search and other was $63.3B, up 12%. Management said foreign exchange was the largest driver of Search's deceleration, and Q4 will see a larger FX headwind in both Search and YouTube. Google Network was $7.5B, up 1%.
Antitrust context
Two cases still matter for the ad business. In search, Judge Mehta's 2025 remedies did not force a Chrome or Android divestiture, but they ended exclusive default deals and required some data sharing. Both sides have appealed, and a ruling is expected between late 2026 and early 2027. In ad tech, Judge Brinkema rejected a forced divestiture of AdX on September 2, 2026, and ordered behavioral remedies with six years of oversight and a compliance monitor.
The media takeaway
For media companies, the signal is that Google's advertising business still funds the company, while its cloud and streaming businesses are growing faster and taking more of the spending. Publishers and video creators depend on the ad engine. Cloud and AI infrastructure are where that engine is being rebuilt.
Sources: Alphabet Q3 2026 earnings release and earnings call (October 28, 2026). All figures in USD.