Vertiv Posts Quarterly Sales of $4.313 Billion as Alphabet Signals Sharp Spending Increase in 2027
Key Facts
Alphabet's chief financial officer said the company still expects a sharp increase in capital expenditures in 2027, with more details to be provided on its fourth-quarter earnings call. The comments came alongside the release of third-quarter results, which showed capital expenditures rising to $51.4 billion in the three months ended Sept. 30, 2026. The spending primarily reflected investment in technical infrastructure. Meanwhile, Vertiv, which supplies infrastructure equipment to data centers, posted net sales of $4.313 billion in the same quarter, up 61% from the corresponding period in 2025. The results put Alphabet's rising spending and infrastructure suppliers' growth at the center of discussion about the scale of demand for AI equipment.
Alphabet's consolidated revenue rose 25% to $127.6 billion in the third quarter, marking its 13th consecutive quarter of double-digit revenue growth. The company said strong performance extended across its businesses, with Google Services revenue rising 11% to $96.3 billion. Google Search and other advertising revenue increased 12%, while cloud led the fastest growth. Google Cloud revenue reached a record $30.7 billion, up 103% year over year. Alphabet attributed cloud performance to growth in infrastructure, enterprise AI solutions and core GCP services, while sales of TPU systems also contributed to revenue growth.
At Vertiv, sales growth came from organic growth of 55% and a contribution of about 6% from acquisitions, according to the company's disclosure, distinguishing expansion in the existing business from the impact of acquisitions. The chief executive said organic orders grew more than 100% year over year in the third quarter. Profitability improved alongside sales: adjusted operating profit rose 83%, and the adjusted operating margin reached 25.2%, up 290 basis points from the third quarter of 2025. Adjusted earnings per share also grew 78% to $2.21. Sales growth extended across regions, rising 75% in the Americas, 50% in Asia-Pacific and 23% in Europe, the Middle East and Africa, the company said.
Alphabet's cloud results point to strong demand for AI and infrastructure services, but sales of TPU systems carry different financing needs from search or traditional cloud services. Reuters reported that selling these systems requires Alphabet to spend on hardware before customers pay, putting pressure on cash flow. Reuters quoted the head of Google Cloud as saying TPU system sales are set to rise in the current quarter and then expand sharply in 2027. That coincides with the company's forecast of a sharp increase in capital expenditures next year, making the timing of spending and collections part of the expansion picture. Alphabet asked investors to wait for its fourth-quarter earnings call for more details on the spending trajectory.
Investors' reaction, however, reflected differing views of Alphabet's spending and demand for data-center suppliers. Alphabet's Class A shares fell 12.6% on Thursday, Oct. 29, their worst session since they began trading more than 20 years ago, after results came in below Wall Street expectations. By contrast, Vertiv shares jumped 13.36% to $236.42 in premarket trading on Oct. 28 after the results were announced. In the broader market, Reuters reported on Oct. 30 that the Nasdaq 100 had fallen more than 5.8% in October, with more than $2 trillion in market value expected to be wiped out amid investor concerns about returns on AI spending. Alphabet closed at $279.84 and Vertiv at $232.5 on Oct. 30, closing prices that came after Alphabet's declining session and Vertiv's premarket gain.
Vertiv raised its fiscal 2026 guidance to expected sales of $14.65 billion at the midpoint of its range, with expected organic growth of 38% compared with 2025. The company expects adjusted diluted earnings per share of $7.15, up 70% from the prior year. For the fourth quarter of 2026, it forecast sales of $4.413 billion and organic growth of 50%, based on the midpoint of its guidance range. Alphabet said further details about its 2027 capital expenditures would be provided on its fourth-quarter earnings call. The head of Google Cloud also expects TPU system sales to rise in the current quarter and then expand sharply in 2027.