Google Cloud Revenue Jumps 103% to $30.7 Billion as Alphabet’s Cash Drain Deepens

Key Facts

Alphabet reported negative free cash flow of $9.07 billion in the third quarter of 2026, compared with analysts’ expectations that it would be near breakeven, according to data Reuters cited from LSEG. This came alongside 103% growth in Google Cloud revenue to $30.7 billion, a record growth rate reported by the company. Alphabet shares fell about 10% in extended trading after the results were announced. Reuters attributed the share decline to investor concerns about the high cost of spending and slower growth in the search engine. Alphabet kept its 2026 capital expenditure forecast at a range of $195 billion to $205 billion, with a significant increase expected the following year.

Alphabet’s business growth extended to its advertising revenue streams: Google Search and other advertising revenue rose 12% to $63.3 billion in the third quarter. YouTube advertising revenue also increased 9% to $11.2 billion, according to the Associated Press. But earnings per share came to $2.12, below analysts’ estimates of about $3.01. The agency said an $8.7 billion loss on equity investments reduced earnings per share by 55 cents. Chief Financial Officer Anat Ashkenazi told analysts the company expects its “capital expenditures to increase significantly” in 2027, with more details to be provided during the fourth-quarter earnings call.

Microsoft, meanwhile, reported revenue of $92.3 billion in the first quarter of its 2027 fiscal year, ended September 30, 2026, up 19% year over year. Net income rose 32% to $36.6 billion, according to the company’s statement. Microsoft said its results exceeded expectations for revenue, operating income and earnings per share, attributing this to demand for Microsoft Cloud. Cloud services revenue reached $63.9 billion, up 30%, while Azure revenue rose 48%. The figures reflect strong growth in cloud activity alongside expanding capital spending by technology companies.

Microsoft Chief Financial Officer Amy Hood said capital spending would accelerate in the second half of the fiscal year, driven by processors and graphics, including higher memory and storage costs. She added that deliveries of deferred capacity were also contributing to the expected spending trajectory. At Alphabet, the company said its use of third-party cloud computing capacity would pressure margins in the near term. Microsoft shares closed at $531.01 and Alphabet shares at $324.89 on October 28, 2026. Alphabet’s next stated opportunity to provide further details on 2027 spending is the fourth-quarter earnings call.