Google’s parent company reported strong revenue growth, but weaker-than-expected advertising results and mounting investment costs sent shares sharply lower.
By A.T.L. N.E.W.S. Staff | October 29, 2026
NATIONAL NEWS | BUSINESS & TECHNOLOGY
MOUNTAIN VIEW, Calif. — Alphabet, the parent company of Google and YouTube, missed Wall Street’s third-quarter revenue expectations despite reporting substantial growth. Revenue reached approximately $127.6 billion, below the $128.2 billion forecast compiled by LSEG, as advertising results disappointed investors.
The company released its results Wednesday, October 28, for the quarter ended September 30. Alphabet reported revenue growth of 25% from a year earlier, while operating income increased 30% to approximately $40.6 billion, according to its quarterly earnings announcement.
Profit Falls Despite Higher Revenue
Net income available to common shareholders declined to $26.17 billion from $34.98 billion a year earlier. Reported earnings were $2.12 per share, with an approximately $8.7 billion loss on equity investments reducing earnings by 55 cents per share, according to The Associated Press.
Even excluding that investment effect, earnings disappointed. Reuters reported adjusted earnings of $2.67 per share against expectations of $3.02, while quarterly free cash flow was negative $9.1 billion.
Advertising Growth Draws Scrutiny
Google Search and other revenue increased 12% to approximately $63.35 billion, while YouTube advertising generated about $11.21 billion. Google’s total advertising revenue reached approximately $82.01 billion, according to the company’s financial results.
Those increases fell below some analysts’ expectations, adding to concerns about the pace of growth in Google’s core advertising operations. Alphabet shares fell more than 10% in after-hours trading Wednesday as investors assessed the results, the AP reported.
Google Cloud Delivers Strong Growth
Google Cloud provided a major source of expansion, with quarterly revenue increasing 103% to approximately $30.7 billion. The company attributed that performance to demand for enterprise AI infrastructure, AI solutions and other cloud services, with sales of its tensor processing unit systems also contributing.
Cloud operating income reached approximately $11.1 billion, compared with $3.6 billion a year earlier. Across Alphabet, the operating margin was 31.8%, showing that the decline in net earnings occurred alongside growth in operating profit.
More Spending Ahead
Alphabet’s investment requirements remain a central concern for investors. Chief Financial Officer Anat Ashkenazi said capital expenditures are expected to increase significantly in 2027, with further details planned for the fourth-quarter earnings call, according to the AP.
The quarter leaves Alphabet facing pressure to demonstrate that its growing AI and cloud businesses can support the cost of expansion. Strong demand and rising operating income offer evidence of progress, but the earnings miss and negative free cash flow show why investors are scrutinizing how that growth translates into financial returns.