Alphabet reported third-quarter revenue of $127.6 billion, up 25%, with Google Cloud revenue up 103% to $30.7 billion, but earnings per share of $2.12 fell short of expectations and shares dropped in after-hours trading.
Alphabet reported third-quarter revenue of $127.6 billion on October 28, up 25% from $102.3 billion a year earlier, for the quarter ended September 30. Operating income rose 30% to $40.6 billion, but net income available to common stockholders fell to $26.2 billion and diluted earnings per share dropped to $2.12 from $2.87 a year earlier.
Google Cloud was the standout, with revenue more than doubling, up 103% to $30.7 billion from $15.16 billion a year earlier. Google Services revenue rose 11% to $96.3 billion, including Search and other revenue of $63.35 billion, up 12%, and YouTube advertising revenue of $11.21 billion. Alphabet also spent $51.4 billion on property and equipment in the quarter, and free cash flow was negative $9.07 billion.
Chief executive Sundar Pichai said the company had a strong quarter and was now on a half-trillion-dollar revenue run rate, with Search query growth at its highest rate in five years. He said Google Cloud growth was powered by demand for artificial intelligence infrastructure and for its TPU systems, that the Gemini app had reached one billion users, and that YouTube Music and Premium subscribers had passed 150 million globally including trials.
The earnings release, furnished in a Form 8-K filing, is the source for the revenue, cloud and operating-income figures, and Reuters and CNBC-based reporting corroborate the market comparison. Revenue came in just below the $128.22 billion analysts expected, while Google Cloud beat its $29.57 billion average estimate. The release attributes the earnings shortfall in part to an $8.7 billion net loss on equity securities, which cut earnings per share by $0.55. Reports of after-hours trading differed on the size of the fall as prices moved, putting it at roughly 7% to 9%, but they agreed on the direction.
The split between operating strength and a profit miss is the question investors are now weighing: whether the surge in cloud demand justifies the scale of capital spending. The next check comes from Amazon's results due on October 29 and from Alphabet's own fourth-quarter report, which will show whether cloud growth stays above 100% and whether cash flow recovers from its negative third-quarter reading.