My notes on the third quar­ter ;-) Alphabet-GOOGL de­liv­ered strong un­der­ly­ing per­for­mance for the third quar­ter of 2026, mark­ing its 13th con­sec­u­tive quar­ter of double-digit top-line growth. Driven by ac­cel­er­at­ing AI in­vest­ments, rev­enue climbed 25% to $127.6 bil­lion, and op­er­at­ing in­come jumped 30% to $40.6 bil­lion. How­ever, net in­come and EPS fell by 25% and 26% re­spec­tively, dragged down by an $8.2 bil­lion un­re­al­ized loss on the com­pa­ny's SpaceX in­vest­ment.
  To eval­u­ate the core eco­nom­ics of Al­pha­bet's busi­ness, in­vestors should focus on its op­er­at­ing per­for­mance, as fu­ture net earn­ings will likely re­main volatile due to fluc­tu­a­tions in its market-valued as­sets (in­clud­ing SpaceX and a 15% stake in An­thropic).
  Seg­ment Per­for­mance & Prod­uct Mile­stones Google Ser­vices • Rev­enue: Reached $96.3 bil­lion, an 11% in­crease. • Search: Grew 12%, achiev­ing its high­est year-over-year query growth in five years, boosted by AI in­te­gra­tion.
  • Sub­scrip­tions: Sur­passed 150 mil­lion YouTube Music and Pre­mium sub­scribers glob­ally (in­clud­ing tri­als). Google Cloud & AI Ecosys­tem • Rev­enue: More than dou­bled to a record $30.7 bil­lion, pro­pelled by in­tense de­mand for AI in­fra­struc­ture and so­lu­tions.
  • Prod­uct Depth: Fea­tures a highly di­ver­si­fied port­fo­lio, with over 18 prod­ucts each gen­er­at­ing more than $1 bil­lion in rev­enue. • Back­log: Stands at $561 bil­lion, with 55% ex­pected to be rec­og­nized as rev­enue over the next 24 months.
  • Hard­ware: TPU sys­tem sales served as a mean­ing­ful growth en­gine across a base of over 100 cus­tomers. • Gem­ini Scale: Gem­ini 4 Argon and Car­bon lead fron­tier AI mod­els. Pro­cess­ing vol­ume surged to nearly 32 bil­lion to­kens per minute——up 40% se­quen­tially and
  a four­fold in­crease year-over-year. • Gem­ini App: Of­fi­cially hit 1 bil­lion users, be­com­ing the fastest-growing prod­uct in Al­pha­bet's his­tory. Mar­gins, Fi­nanc­ing, and Cap­i­tal Al­lo­ca­tion Prof­itabil­ity & Mar­gins
  • Op­er­at­ing Mar­gin: Ex­panded by 100 basis points to 31.8%. • Net In­come / EPS: De­clined to $26.2 bil­lion and $2.12, re­spec­tively, due to the non-operating SpaceX val­u­a­tion ad­just­ment.
  Cap­i­tal Ex­pen­di­tures & Cash Flow • YTD Op­er­at­ing Cash Flow: Rose 13% to $127.1 bil­lion. • YTD Cap­i­tal Ex­pen­di­tures: More than dou­bled to $132.0 bil­lion.
  • Free Cash Flow: Turned neg­a­tive at -$4.8 bil­lion for the first nine months due to heavy in­fra­struc­ture spend­ing. • Div­i­dends: Dis­trib­uted $8.2 bil­lion in div­i­dends dur­ing the first nine months.
  Cap­i­tal Rais­ing & Liq­uid­ity To fund ag­gres­sive AI in­vest­ments, Al­pha­bet pulled mul­ti­ple fi­nanc­ing levers dur­ing the quar­ter: • Eq­uity: Is­sued 12 mil­lion Class A shares (net pro­ceeds of $4.3 bil­lion) and 24 mil­lion Class C shares (net pro­ceeds of $8.1 bil­lion).
  • Debt: Is­sued un­se­cured notes net­ting $28.7 bil­lion. Bal­ance Sheet & Out­look Fi­nan­cial Po­si­tion (Quarter-End) Met­ric Cash & Mar­ketable Se­cu­ri­ties >$265.0 Bil­lion Long-Term Debt (Nearly tripled YoY) $125.1 Bil­lion
  Share­hold­ers' Eq­uity $677.5 Bil­lion Note: These fig­ures omit sub­stan­tial un­recorded com­mit­ments for up­com­ing AI de­vel­op­ments. • For­ward Guid­ance: Man­age­ment reaf­firmed its 2026 cap­i­tal ex­pen­di­ture out­look of $195 bil­lion to $205 bil­lion.
  • Long-Term Tra­jec­tory: Capex is pro­jected to in­crease sig­nif­i­cantly in 2027 to cap­ture ro­bust on­go­ing mar­ket de­mand.