Alphabet more than doubles cloud revenue but burns $9.07 billion

Google parent Alphabet more than doubled Google Cloud revenue to $30.71 billion in the quarter ended September 30, 2026, exceeding analysts’ estimates, but burned $9.07 billion as it expanded spending on superintelligence (SI). Management said slower Search advertising growth partly reflected lower revenue from queries through its chatbot-style interface.

This was Alphabet’s second consecutive quarter of negative free cash flow: it spent more cash than it generated after investment in assets. The June quarter’s $5.9 billion deficit was its first in 22 years as a public company. The September deficit was a rounded $9.1 billion, against analysts’ expectations of near break-even. Alphabet shares fell about 10% in after-hours trading following the results.

Google links slower Search growth to chatbot queries

Alphabet’s third-quarter capital expenditure reached $51.4 billion. Capital expenditure pays for long-lived assets such as computing infrastructure.

Chief business officer Philipp Schindler said strong growth in SI Mode queries, through Google’s chatbot-style Search interface, partly explained the larger-than-expected slowdown in Search advertising growth. Those queries generated less revenue than traditional searches, among other factors affecting growth. Google was still experimenting with ads in the interface and said it planned to expand them internationally.

Chief executive Sundar Pichai said Search queries were growing at their fastest pace in five years. He also said Google’s Gemini app had reached one billion users, The Decoder reported.

Advertising falls short of expectations

Net income available to common shareholders fell 25% to $26.17 billion.

Melissa Otto, head of research at S&P Global Visible Alpha, said cash burn and the below-expectation performance of Google’s core business could lead investors to question whether SI competitors were taking market share from Search.

Alphabet plans higher spending in 2027

Google Cloud chief Thomas Kurian said sales of Google’s tensor processing units, or TPUs—specialised computing chips—had become a meaningful contributor to the unit. Alphabet began recording revenue from direct sales of systems containing those chips and related hardware and software in the June quarter.

Jeremy Saltzberg, vice president and senior investment officer at Check Capital, which owns Alphabet shares, defended the large outlays. He said Alphabet needed to spend heavily to remain competitive.

Chief financial officer Anat Ashkenazi expects the use of outside cloud capacity to put near-term pressure on profit margins, Reuters reported. She also warned that building TPU inventories would place further pressure on free cash flow.

Alphabet kept its 2026 capital spending forecast at $195 billion–$205 billion. Ashkenazi said spending would increase significantly in 2027, but executives did not give a numerical forecast for that year.