Alphabet misses Q3 estimates as EPS falls to $2.12 and free cash flow goes to -$9.1B; shares drop 8.5% after hours
What happened
Alphabet reported Q3 2026 results after the close on Wednesday, October 28, missing on the bottom line and sending shares down 8.5% in after-hours trading to $297.11. EPS came in at $2.12, down from $2.87 a year ago and well below the $3.02 consensus, while revenue rose 25% to $127.6 billion, narrowly missing the $128 billion expectation. The EPS miss was driven largely by an $8.66 billion loss on equity securities, versus a $10.73 billion gain a year earlier; excluding one-time items, EPS was $2.67. Google Cloud was the standout, with revenue more than doubling (+103%) to $30.7 billion and operating profit of $11.1 billion, above the $9.8 billion estimate. But Google Services — search, YouTube and subscriptions — fell short, with operating income of $39.2 billion versus $40.8 billion expected, and YouTube ad revenue of $11.21 billion missing the $11.5 billion estimate. Free cash flow went further negative to -$9.1 billion, the second straight quarter of negative FCF, as Q3 capex jumped 114% to $51.4 billion.
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Start your free 14-day trialWho’s affected
- Alphabet (GOOGL) — direct, shares -8.5% after hours, which would put the stock back in the red for 2026. Microsoft (MSFT) and Amazon (AMZN) — cloud/AI-spending peers
- Alphabet's cash burn sharpens scrutiny of their capex discipline. AI infrastructure and chip suppliers (NVDA, Broadcom, memory names) — Alphabet's $51.4B quarterly capex supports demand, but the negative-FCF backlash raises questions about how long hyperscalers can sustain this pace. YouTube/streaming and ad-dependent names — the YouTube ad miss and Services shortfall weigh on ad-market sentiment.