Google parent Alphabet reported Q3 2026 financial results on Wednesday, taking in nearly $128 billion in revenue with over $26 billion in net income. Despite these headline numbers, the company's stock price plummeted nearly 12 percent following the earnings release, marking one of the largest post-earnings drops in its history. Revenue rose 25 percent year over year, but net income fell by almost $9 billion compared to the previous year. Earnings per share came in at $2.12, well below the $3.02 consensus projection.
During the earnings call, Chief Business Officer Philipp Schindler addressed concerns about AI search performance. While search volume grew 12 percent year over year in Q3, this represented a slowdown from 17 percent growth in Q2 and 19 percent in Q1. Search revenue was flat in Q3, largely attributed to consumers increasingly relying on AI chatbots for information discovery.
Google acknowledged that AI search queries generate less revenue than traditional web searches, as AI Mode queries feature fewer and lower-cost ads. The company expects to increase AI spending next year despite these monetization challenges. On a positive note, Google Cloud exceeded expectations, crossing $30 billion in revenue—about $1 billion above analyst estimates.
Source: Ars Technica · Summarized by HeadlinesBriefing