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Alphabet’s Google Cloud revenue doubles to $31 billion as cash flow stays deep red
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Alphabet’s Google Cloud more than doubled its revenue to $30.7 billion in the third quarter, helping to soften some of the more tepid growth from Google Search and YouTube.
Key facts
- Alphabet reported third-quarter revenue of $127.6 billion, up 25% from $102.3 billion a year earlier, roughly in line with the $127.9 billion analysts were expecting, according to consensus estimates
- Meanwhile, operating income rose 30% from a year ago, but dipped slightly to $40.6 billion compared to $40.8 billion last quarter
- Google Search rose 12% to $63.4 billion, a marked slowdown from 17% growth in the second quarter and 19% in the first
- The company confirmed its full-year capital spending forecast and capex is expected to reach $200 billion in 2026, and then rise to $300 billion in 2027
Summary
Despite the strong showing from its cloud business, investors sold off and Alphabet’s after-hours stock price dropped more than 11% following the release of its quarterly results. Aptus Capital Advisors head of equity and portfolio manager David Wagner wrote that Google Cloud did what it was supposed to this quarter. Investors are concerned about sluggish growth in Google’s search business, amid fears it might be swallowed up by “AI cannibalizing the franchise,” Wagner wrote. Tech analyst Dan Ives remained characteristically bullish in a first-take note from his Yorkville Ives equity research.