THE ESSENTIALS IN 30 SECONDS

  • Google Cloud revenue rose 103% year over year to $30.7 billion, with a segment operating margin of 36.2%; the cloud backlog stood at $561 billion.
  • Quarterly capital expenditures reached $51.4 billion; the 2026 range of $195–205 billion is unchanged and the CFO expects a significant increase in 2027.
  • Alphabet says the Gemini app has about 1 billion users and its first-party APIs process nearly 32 billion tokens per minute.

Alphabet reported third-quarter 2026 results on October 28, and the story was once again its AI build-out. Revenue rose 25% to about $127.6 billion, slightly below the analyst consensus cited by Fortune, while Google Cloud grew far faster than the rest of the group.

Cloud is now the growth engine

Google Cloud revenue came in at $30.7 billion, up 103% from $15.2 billion a year earlier, after growth of roughly 63% in the first quarter and 82% in the second, according to StockTitan's breakdown of the release. The segment's operating margin widened to 36.2% from 23.7%. Chief financial officer Anat Ashkenazi put the cloud backlog at $561 billion at the end of September and said she expects just over 55% of it to turn into revenue within 24 months.

On the earnings call, executives described demand for Google's TPU chips as strong. Cloud chief Thomas Kurian said nearly 100 customers now use TPUs, and Ashkenazi said sales of TPU systems should keep growing in the fourth quarter before a larger revenue ramp in 2027. She also acknowledged that Alphabet is supply-constrained and began renting third-party compute capacity at the end of the quarter, which will weigh on margins in the near term.

Sundar Pichai said the Gemini app has about 1 billion users and that first-party model APIs now process nearly 32 billion tokens per minute, more than four times the level of a year ago. Search revenue grew 12% to $63.3 billion, a slower pace than earlier in the year.

The cost of the build-out

Capital expenditures more than doubled to $51.4 billion for the quarter, from about $24 billion a year earlier. The full-year 2026 guidance of $195 billion to $205 billion was left unchanged, and Ashkenazi said spending should "increase significantly in 2027," with details promised for the next call. Free cash flow was negative for a second straight quarter, at about minus $9.1 billion.

Earnings per share fell to $2.12 from $2.87, partly because of an $8.7 billion loss on equity securities that the company says cut EPS by 55 cents. Class A shares dropped around 9% in after-hours trading, according to StockTitan.

What to watch

The quarter shows that Alphabet's cloud business is converting AI demand into revenue at scale, but also that the bill keeps rising faster. The 2027 capex figure, the pace at which the $561 billion backlog is recognized, and whether third-party capacity dents cloud margins are the main open questions. The backlog and user figures come from company statements and have not been independently audited.