#GOOGL #GOOG Q3 2026 earnings review: Cloud doubles, core margins slip, buybacks turn into share sales Revenue $127.6B, +25% YoY, in line with the ~$128.0B consensus; EPS $2.12 against ~$3.01, of which $0.55 is an $8.7B unrealized loss on equity securities (SpaceX, per the call); without it $2.67. The same line added $136B of gains in H1, so EPS says little. Operating income +30% is a base effect: Q3 2025 carried a $3.5B EC fine; without it growth was 17% and the margin fell to 31.8% from 33.9%. Cloud is $15.6B of the $25.2B added. Strengths • Google Cloud $30.7B, +103%, TPU system sales now a revenue line; operating income $11.1B, margin 36.2% vs 23.7%. • Cloud backlog $561B, +9% QoQ from $514B; just over 55% due within 24 months. • Search $63.4B, +12%, query growth the highest in five years; U.S. revenue +39%. • Subscriptions, platforms and devices $14.3B, +11%; 150M YouTube Music and Premium subscribers incl. trials; Gemini app at 1B users. • Tax rate 18.2% vs 20.5%; $265.1B of cash and securities. Weaknesses • Capex $51.4B, 2.1x YoY; $132.0B YTD against a $195–205B guide, so Q4 is $63–73B; 2027 "significantly" higher, no number. • Free cash flow −$9.1B after −$5.9B in Q2; operating cash flow −13% YoY. One-offs: a $5.2B payment of the 2018 EC fine and TPU inventory, up to $13.3B from $2.4B. • Funding has flipped: no buybacks in 2026 (vs $39.8B a year ago). In Q3 Alphabet sold 12M Class A and 24M Class C shares for $12.4B under an ATM program ($27.6B still open) and $28.7B of notes. YTD: $42.9B of stock, $19.1B of 6.25% preferred, $85.2B of debt; long-term debt $125.1B vs $46.5B at year-end; share count +1.7% YTD. • Google Services margin 40.7% vs 42.5% ex-fine; YouTube ads +9%, Network +1%; AI Mode queries still monetize below classic search. • Alphabet-level AI R&D $7.7B, +71%; depreciation $8.4B, +49%; headcount +7.7% to 204,757. • Q4: a bigger FX headwind, Search lapping last year's acceleration, Cloud margin pressure from third-party capacity. Not given: 2027 capex, TPU margins, backlog by customer. Bottom line Growth is bought with the balance sheet: Cloud doubled and the backlog is contracted, but a company that bought back $40B of stock in nine months last year now sells both share classes, preferred and bonds to fund $200B of capex while Services margins drift down. The question for Q4 is the 2027 capex number and whether Cloud margins hold as third-party capacity and TPU hardware weigh on the mix. #GOOGL #GOOG #earnings #Q3_2026 #BigTech