Aerial view at sunset of the Google data center in Council Bluffs, Iowa, a long low building with cooling equipment along one side · Chad Davis, via Wikimedia Commons · CC BY 2.0

Article · 2026-10-29 · 2 min read · Internet search and cloud computing · Stocks

Alphabet's cloud revenue doubles as building turns cash flow negative

The business earned more while its SpaceX stake lost value, and record spending on data centers outran the cash the business brought in.

By the desk. Researched and written by an AI model from the sources listed at the end; nothing here restates another publication's text.

GOOGL Alphabet Inc.direct GOOG Alphabet Inc. Class C Capital Stockdirect ORCL Oracle Corpadjacent AVGO Broadcom Inc.adjacent BX Blackstone Inc.adjacent

What happened

Alphabet reported on Wednesday 28 October that third-quarter revenue grew 25 percent to $127.6 billion, with Google Cloud revenue up 103 percent to $30.7 billion. ^[1]

Operating income was $40.6 billion, against $31.2 billion a year earlier, the company reported. Net income was $26.5 billion, against $35.0 billion. ^[1]

Why it matters

The operations earned more while the investments lost value: other income and expense went from a $12.8 billion gain to an $8.2 billion loss. The 10-Q says the swing came mainly from unrealized losses on listed shares, largely SpaceX. Capital spending of $51.4 billion outran $42.3 billion of operating cash, so free cash flow was negative $9.1 billion, a second negative quarter in a row. ^{[1, 2]}

The segments and the cash

Google Services revenue grew 11 percent to $96.3 billion, with operating income of $39.2 billion. Search and other brought in $63.35 billion, YouTube ads $11.2 billion, and subscriptions, platforms and devices $14.3 billion. Google Cloud's operating income was $11.1 billion, against $3.6 billion a year earlier. ^[1]

Other Bets brought in $372 million and lost $2.0 billion at the operating line. Costs kept at the Alphabet level, mainly shared AI research, came to $7.7 billion. ^[1]

In the quarter Alphabet raised $28.7 billion from senior notes and $12.4 billion from selling new shares, and bought back none. Its contracted backlog was $567.7 billion, $560.8 billion of it for Google Cloud, the 10-Q says. ^{[1, 2]}

What management said

Chief financial officer Anat Ashkenazi said the 2026 capital spending range of $195 billion to $205 billion is unchanged. She said the company continues 'to expect our CapEx to increase significantly in 2027' and will give details on its fourth-quarter call. ^{[3, 4]}

She said Cloud expects 'margin headwinds in the near term' as it rents outside computing capacity. Sales of TPU systems, Google's own AI chips sold as complete systems, should keep scaling, she said, 'followed by a meaningful revenue ramp in 2027.' ^{[3, 5]}

Chief executive Sundar Pichai said the company is 'now on a half-trillion dollar revenue run rate' and sees 'strong demand for our TPU systems across a wide range of customers.' ^[1]

What settles it next

The preferred stock dividend is payable on Sunday 15 November and the common stock dividend on Monday 14 December, the release says. Ashkenazi said the 2027 spending details come on the fourth-quarter call, and the 10-Q says the GFiber transaction is expected to close in late 2026. ^{[1, 2, 3]}

Who it reaches

Alphabet (GOOGL, GOOG) is direct: the results are its own. Oracle (ORCL) is adjacent: Thomas Kurian, who runs Google Cloud, named a new partnership with it to deliver TPU systems. ^{[1, 3]}

Broadcom (AVGO) is adjacent: Kurian said Google works with Anthropic on TPUs 'both directly and via Broadcom.' Blackstone (BX) is adjacent: it formed the Crux AI venture with Alphabet, whose contract accounts for $16.8 billion of the backlog, the 10-Q says. ^{[2, 3]}

Sources

Every stock is a company; the desk grades the company behind the stock. This article describes; it does not recommend. Adjacent means the company is not named in the event and the path by which it is reached is stated above.

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