Alphabet, the Mountain View parent of Google, reported third-quarter results Wednesday afternoon. Sales grew fast, but they still fell short of Wall Street's expectations.

The numbers

  • Revenue: $127.58 billion, up 25% from a year earlier. Analysts polled by LSEG expected $128.22 billion, CNBC reports. CNBC says it was the company's first miss on both revenue and earnings in nearly four years.
  • Earnings per share: $2.12, down from $2.87. CNBC puts the adjusted figure at $2.67 against $3.02 expected.
  • Net income: $26.2 billion, down from $35.0 billion.
  • Google Cloud: $30.7 billion, up 103%.
  • Search and other: $63.35 billion, up 12%.
  • YouTube ads: $11.2 billion.

Cash flow turns negative

Alphabet spent $51.36 billion on property and equipment in the quarter, mostly AI data center build-out. That turned free cash flow negative to the tune of $9.07 billion, according to the company's filing. CNBC reports long-term debt rose to $125.1 billion and that shares fell more than 10% after the report. The company kept its 2026 capital spending forecast at $195 billion to $205 billion. "We continue to expect our capex to increase significantly in 2027," finance chief Anat Ashkenazi told analysts. CNBC reports that annual capex is expected to top $300 billion in 2027.

Results were also dragged down by an $8.66 billion loss on equity securities, after big gains in the second quarter tied to stakes including SpaceX and Anthropic.

The AI pitch

Google said the Gemini app has reached 1 billion users, making it the fastest-growing product in its history. CEO Sundar Pichai said AI investments drove the highest search query growth rate in five years. Google Cloud CEO Thomas Kurian said the company is seeing "extraordinary demand" from AI labs, financial institutions and enterprises. Alphabet had 204,757 employees at the end of September.

Our preview: Alphabet earnings preview: what to watch from Google on Oct. 28.