Alphabet Shares Drop 8% as Cloud Revenue Doubles but Capital Spending Surges

Alphabet Inc. reported Q3 2026 results showing total revenue of $127.6 billion, a 25% year‑over‑year increase, but slightly below the $127.93 billion consensus. Google Cloud revenue rose 103% to $30.7 billion, and its profit margin widened to 36.2% from 23.7% a year earlier. However, the company’s capital expenditures jumped 114% to $51.4 billion, exceeding operating cash flow of $42.3 billion and leaving a free‑cash‑flow gap of $9.1 billion. Alphabet’s operating income of $40.58 billion missed the $43.16 billion estimate. The stock fell 7.79% in after‑hours trading to $296.81, a decline of about 8% from the close. The sharp rise in AI‑related spending and capital outlays has drawn scrutiny from investors and Fed Chair Kevin Warsh, who warned that higher interest rates could impact technology firms’ ability to finance AI projects.