Alphabet reported revenue of $127.6 billion for the quarter ended 30 September 2026, up 25% on a year earlier. Google Cloud's revenue rose 103% to $30.7 billion. Free cash flow, which is operating cash flow less spending on property and equipment, was negative $9.1 billion.
Alphabet owns Google, YouTube, and Google Cloud. This guide, written on 4 November 2026, covers what each part sells. It uses the fiscal 2025 annual report, the third-quarter 2026 results that Alphabet announced on 28 October 2026, and five years of share prices.
What does Alphabet do? Alphabet is the parent company of Google. It sells advertising on Google Search, YouTube, and partner sites, along with subscriptions, devices, and cloud computing. It also runs Other Bets such as Waymo.
Advertising made 72.5% of third-quarter 2025 revenue and 64.3% of third-quarter 2026 revenue.
Google Cloud grew from 14.8% of revenue in the third quarter of 2025 to 24.1% in the third quarter of 2026.
In that quarter, capital expenditures of $51.4 billion were larger than operating cash flow of $42.3 billion, so free cash flow was negative.
How we sourced Alphabet's numbers
Company figures come from Alphabet's Form 10-K for fiscal 2025 (the year ended 31 December 2025). They also come from its press release of 28 October 2026 and its Form 10-Q for the quarter ended 30 September 2026. A Form 10-K is the annual report. A Form 10-Q is the quarterly report.
Profit figures use US accounting rules, known as Generally Accepted Accounting Principles (GAAP). Free cash flow is the one adjusted figure. Alphabet defines it as net cash from operating activities less capital expenditures, such as servers and data centres.
Prices run from the close on 3 November 2021 to the close on 3 November 2026, which is 1,255 trading days. Returns count dividends as though they were reinvested, before costs and tax.
How does Alphabet make money?
Alphabet reports three segments, the parts of the company that it reports separately. Google Services covers Search, YouTube, Android, Chrome, Maps, Play, and devices. Google Cloud sells computing, data, security, and AI services to businesses. Other Bets is a group of smaller businesses, including Waymo, which runs autonomous transportation services.
Source: Alphabet Form 10-K, fiscal 2025; YX Insights
Google advertising was the largest source of revenue in fiscal 2025, at $294.7 billion or 73.2% of the $402.8 billion total. Google Search & other alone brought in $224.5 billion, or 55.7%.
Subscriptions, platforms and devices brought in $48.0 billion, or 11.9%. The subscriptions are mainly YouTube services and Google One. The platforms are mainly Google Play. The devices are mainly Pixel phones.
Google Cloud made $58.7 billion, or 14.6%. It earns this mostly from usage fees and subscriptions. It also sells Tensor Processing Unit (TPU) systems, built around Alphabet's custom AI chips.
US dollars | Fiscal 2025 (year to 31 Dec 2025) | Q3 2025 (quarter to 30 Sep 2025) | Q3 2026 (quarter to 30 Sep 2026) | Change, Q3 2026 on Q3 2025 |
|---|---|---|---|---|
Google Search & other | $224.5 billion | $56.6 billion | $63.4 billion | +12% |
YouTube ads | $40.4 billion | $10.3 billion | $11.2 billion | +9% |
Google Network | $29.8 billion | $7.4 billion | $7.5 billion | +1% |
Subscriptions, platforms and devices | $48.0 billion | $12.9 billion | $14.3 billion | +11% |
Google Services | $342.7 billion | $87.1 billion | $96.3 billion | +11% |
Google Cloud | $58.7 billion | $15.2 billion | $30.7 billion | +103% |
Other Bets | $1.5 billion | $0.3 billion | $0.4 billion | +8% |
Hedging gains (losses) | −$0.1 billion | −$0.2 billion | $0.2 billion | n/a |
Total revenue | $402.8 billion | $102.3 billion | $127.6 billion | +25% |
Operating income (loss) | ||||
Google Services | $139.4 billion | $33.5 billion | $39.2 billion | +17% |
Google Cloud | $13.9 billion | $3.6 billion | $11.1 billion | +209% |
Other Bets | −$7.5 billion | −$1.4 billion | −$2.0 billion | n/a |
Alphabet-level activities | −$16.8 billion | −$4.5 billion | −$7.7 billion | n/a |
Total operating income | $129.0 billion | $31.2 billion | $40.6 billion | +30% |
GAAP figures from Alphabet's Form 10-K for fiscal 2025 and its third-quarter 2026 results release. Alphabet-level activities are costs not assigned to a segment, mainly shared AI research and development. n/a means the change is not meaningful. Source: Alphabet Form 10-K and third-quarter 2026 results release
What did Alphabet earn in fiscal 2025?
Revenue rose 15.1% to $402.8 billion. Google Cloud grew fastest, up 35.8%, while Google Services grew 12.4%. Operating income was $129.0 billion, a GAAP operating margin of 32.0%. Operating margin is operating income divided by revenue.
Operating cash flow was $164.7 billion. Capital expenditures were $91.4 billion, up 74.1% on fiscal 2024. Free cash flow was therefore $73.3 billion, or 18.2% of revenue.
What did the third quarter of 2026 show?
Source: Alphabet third-quarter 2026 results release; YX Insights
Revenue rose 25% to $127.6 billion. Google Cloud added $15.6 billion of the $25.2 billion rise, which is 61.6% of it. Google Services added $9.3 billion, up 11% to $96.3 billion. Advertising's share of revenue fell from 72.5% to 64.3% while Cloud grew faster.
Inside Google Services, Search & other grew 12% to $63.4 billion.
Operating income rose 30% to $40.6 billion, a 31.8% operating margin. We calculate segment margins as segment operating income divided by segment revenue. Google Cloud's rose from 23.7% to 36.2%, while Google Services' rose from 38.5% to 40.7%. Segment margins leave out Alphabet-level activities, which cost $7.7 billion in the quarter.
Alphabet said TPU system sales were a meaningful contributor to Cloud's growth. Its inventory rose from $2.4 billion at 31 December 2025 to $13.3 billion at 30 September 2026. Google Cloud also includes Wiz, a security company that Alphabet bought for $29.5 billion in March 2026.
Why was free cash flow negative?
Source: Alphabet third-quarter 2026 results release; YX Insights
Free cash flow was $24.6 billion in the fourth quarter of 2025 and $10.1 billion in the first quarter of 2026. It was negative $5.9 billion in the second quarter and negative $9.1 billion in the third.
Capital expenditures rose much faster than operating cash flow fell. They were $51.4 billion in the third quarter, up from $24.0 billion a year earlier, while operating cash flow fell 12.6% to $42.3 billion. In the first nine months of 2026, capital expenditures were $132.0 billion against $63.6 billion a year earlier.
In the third quarter, Alphabet issued senior unsecured notes for net proceeds of $28.7 billion.
It sold Class A and Class C shares for $12.4 billion. In June 2026, it sold mandatory convertible preferred stock for $19.0 billion. It made no share repurchases in the first nine months of 2026, against $39.8 billion a year earlier.
Net income available to common stockholders fell 25% to $26.2 billion. Other income and expense swung from a gain of $12.8 billion to a loss of $8.2 billion. The 10-Q blames the swing on unrealised losses on listed shares, largely SpaceX, plus smaller unrealised gains on shares in a private company.
What has happened since the quarter ended?
Alphabet announced its results on 28 October 2026. Chief executive Sundar Pichai said in the release that the Gemini app had reached one billion users.
In October 2026, Waymo entered a credit agreement for a $5.0 billion senior secured term loan that matures in October 2032. Alphabet does not guarantee it, according to the 10-Q.
What moves Alphabet's stock?
Search and advertising growth. Search & other grew 13.4% in fiscal 2025 and 12% in the third quarter of 2026.
Cloud growth and margin. Cloud's share of revenue rose from 14.8% in the third quarter of 2025 to 24.1% a year later, while its margin rose.
Capital expenditures. Spending ran above operating cash flow in the second and third quarters of 2026.
Legal cases. In September 2026, the court in the Justice Department's advertising technology case denied its request for structural divestitures of Google's advertising technology assets and ordered behavioural remedies. The search case judgment of December 2025 is under appeal.
Our Alphabet Discounted Cash Flow post shows how changing the drivers changes the value.
How has GOOGL performed over five years?
Source: YX Insights price data (GOOGL, SPY)
GOOGL is the ticker for Alphabet's Class A shares on Nasdaq. A $10,000 stake at the close on 3 November 2021 was worth $19,285 on 3 November 2026, a return of 14.0% a year. SPY (the S&P 500 ETF) turned the same $10,000 into $17,358, or 11.7% a year.
We searched the five years for the deepest fall from a previous high. GOOGL fell 44.3% between 18 November 2021 and 3 November 2022. It regained the old high on 25 January 2024, which is 2.18 years after the high. This is a drawdown, a fall from a peak to a low.
GOOGL's highest value in the window came on 13 May 2026. On 3 November 2026, it stood 30.4% below that high.
Over the last year, GOOGL lost 1.0% while SPY gained 11.6%. Over three years, GOOGL gained 119.0% and SPY 79.9%. Our what-if post on Alphabet covers ten years.
What does this guide leave out?
The guide gives no forecast and no view on value.
What does Alphabet do, in short?
Alphabet sells advertising, subscriptions, devices, and cloud computing. Our Multi-model Signals cover Alphabet. For the wider group, see our Magnificent 7 guide.
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Common questions about Alphabet
Is Alphabet the same as Google?
No. Alphabet is the parent company of Google. Google Services and Google Cloud together made $401.4 billion of Alphabet's $402.8 billion of fiscal 2025 revenue. Other Bets, which includes Waymo, made $1.5 billion. Alphabet's Class A shares trade as GOOGL and its Class C shares as GOOG.
Does Alphabet make most of its money from ads?
Yes. Google advertising made $294.7 billion, or 73.2% of Alphabet's fiscal 2025 revenue of $402.8 billion. In the third quarter of 2026, it made $82.0 billion, or 64.3% of revenue against 72.5% a year earlier, while Google Cloud's revenue rose 103% to $30.7 billion.
Does Alphabet pay a dividend?
Yes. In October 2026, Alphabet's board declared a quarterly cash dividend of $0.22 per share on its Class A, Class B, and Class C stock. It is payable on 14 December 2026 to holders of record on 7 December 2026. Alphabet paid $2.9 billion in dividends on its common and preferred stock in the third quarter of 2026.
What is the difference between GOOGL and GOOG?
GOOGL is Alphabet's Class A stock and GOOG is its Class C stock. The 10-K says the rights of the classes are identical except for voting. Class A has one vote per share, while Class C has no voting rights, except where the law requires them. Class B has 10 votes per share.
Is Google Cloud profitable?
Yes. Google Cloud earned an operating income of $11.1 billion on $30.7 billion of revenue in the third quarter of 2026, a margin of 36.2%. In fiscal 2025, it earned $13.9 billion on $58.7 billion, a margin of 23.7%. These are GAAP segment figures from Alphabet's filings.
DISCLAIMER: This article is intended for educational purposes only. Any information or analysis in this note does not constitute an offer to sell or a solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice, nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.
