Google Cloud Revenue More Than Doubles to $30.7 Billion

Google Cloud growth was the headline as Alphabet reported that Google Cloud revenue more than doubled in the third quarter of 2026, rising 103 percent year over year to $30.71 billion. The company reported total revenue of $127.58 billion for the quarter ended September 30, up 25 percent from a year earlier, in results released on October 28 and covered widely on October 29. Cloud operating income more than tripled to $11.12 billion, from $3.59 billion a year earlier, lifting the cloud operating margin to 36.2 percent. Alphabet also reported a cloud backlog of $561 billion, reflecting strong contracted demand from businesses building AI systems on its platform.

The cloud surge was driven by demand for AI infrastructure, enterprise AI services and sales of Google’s own TPU systems, the specialised chips the company builds for AI workloads. Search and other revenue rose only 12 percent to $63.35 billion, below what analysts had expected, and Alphabet’s earnings per share fell 26 percent to $2.12, missing estimates. The profit miss was driven in part by an $8.7 billion loss on equity securities, including an $8.2 billion unrealised loss cited in coverage of the results. Alphabet also spent $51.4 billion on capital projects during the quarter, pushing free cash flow to negative $9.1 billion for a second straight quarter, as the company invested heavily in data centres and computing capacity.

Google Cloud growth outpaces search

The Google Cloud growth figures show a company in transition, with cloud computing now accounting for about 24 percent of Alphabet’s total revenue, up from 15 percent a year earlier. Management said it expects to recognise slightly more than 55 percent of the $561 billion backlog as revenue over the next 24 months. The company maintained its 2026 capital spending guidance of $195 billion to $205 billion and expects a significant increase in 2027. Investors reacted sharply to the spending and the profit miss, with Alphabet shares falling about 12.6 percent on October 29. The reaction highlights the central question facing big technology companies in the AI era: cloud demand is booming, but the cost of building the data centres and chips to meet it is rising even faster, and shareholders want proof that the spending will pay off.

Source: Zacks