Alphabet Announces Third Quarter 2026 Results [pdf] | Hacker News Reader

Alphabet Announces Third Quarter 2026 Results [pdf]

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82 pointsmfiguiere57 comments

Impressive growth, and even more, ahem, impressive capital spending :-O

According to page 6, year to date in 2026, operations generated $127B in cash, and capital spending on property and equipment was $132B, so year to date, the business consumed $5B.

According to page 8, in the last quarter, operations generated $42B and capital spending was $51B, so over the past three months, the business consumed $9B.

Those figures don't include any capital spending made through off-balance sheet arrangements. No idea what those might be, or for how much Alphabet could be on the hook.

I'm curious to see if all that money invested in infrastructure will pay off. I hope it pays off, for everyone's sake, but hope is not certainty.

It's wild how quickly the tide turned from big tech companies having hundreds of billions in cash reserves and not knowing what to do with it to now taking on hundreds of billions in debt for questionable infrastructure buildouts.

Ironically their massive cash reserves created an environment where the cost of AI infrastructure could be bid up so much to consume those very cash reserves.

It’s never irony

At least in the case of Google, the pace of their buildout is very nearly being matched by the growth of Cloud consumption (and related contracts with companies like Anthropic & OAI). Cloud had >100% y/y growth this quarter to >$30b rev. That's insane, and it's quite profitable. But consumption revenue is always a lagging indicator of capital investment, and it just so happens that this business cycle is demanding a scale of capex heretofore unimaginable. Institutional investors seem to have been happier with business as usual (big annual stock buy-backs, predictable cloud/ads/youtube growth in the high-20% range, EPS in the $5-9/share/qtr range, and an enormous pile of cash). This is the first time since 2004 where buying GOOG really feels like placing a bet rather than buying a blue-chip. To that point, this is also why GOOG has been treated like an AI company for the past 18mo or so, rather than a media & infrastructure company, and what justified the dramatic increase in it's P/E.

Taking a longer view, I have confidence things will work out well and this dip is a great buying opportunity, but I can also understand why the market several reasons to be skittish.

Why their shares tanked 10% then?

Pretty sure it's this part:

> generating $127B in cash, and capital spending on property and equipment was $132B, so the business consumed $5B.

not sure why you're getting downvoted, this is pretty much the reason.

well, they don't burn it like anthropic on rent, they spend it on their own TPUs, right?

There's no guarantee it'll generate big enough returns and it's probably at jacked up prices.

It's a tale of two AIs for Google. Cloud doubled revenue and tripled profit, probably based off serving models. So good for Cloud.

Search increased revenue and profit which is good. Means that LLMs are not yet stealing revenue. But also bad because the massive spend on infrastructure doesn't look like it's going to come back as increased revenue.

Out of all companies, with their own TPUs and native large scale computing... "habitat" they exist in – they probably know how to spend it well.

People on the internet really overrate google's TPU advantage. OAI and Anthropic and others have been using TPUs as well for a long time now too. And they've also hired lots and lots of talent from the rest of FAANG, hyperscale compute talent and knowledge is also well distributed through all the top AI companies at this point.

They control the supply chain though, so they can't be price-gouged by Nvidia

It's about expectations. They missed expectations on earnings, meaning they're less valuable than people thought.

First signs that Search revenue might be peaking.

They need to do layoffs and it will pop by 20%

because missed estiamtes https://finance.yahoo.com/technology/article/google-stock-pl...

I mean, it will pay off for society one way or the other — we’ll have the datacenters and (hopefully) the weights at the end of this.

That’s an amazing amount of revenue and spend, though. Wild.

The buildout is out of control lol

sell shovels

Google is selling shovels. They spent $131 billion to produce shovels so far this year

I would say Google is buying shovels and selling shoveling services.

the analogy is falling apart.

I meant Datacenter real estate, construction companies, building materials. :)

Meh I bought the dip. Google has such giant moats. I’m still hugely long tech.

I'm sure Google will end up being one of the winners no matter what but man the market hates the stock. It was trading at 16 p/e before earnings and is now at like 14. Less than half of Microsoft, Apple, Nvidia.

One fun line from the results: Google assets are up in one year from $595,281M to $1,003,312M, in other words one trillion dollars. Not market cap, mind you, but assets that could in theory be sold today to raise a trillion dollars in cash.

Liabilities also increased from $180,016M to 325,763M, but in comparison that seems almost puny.

> could in theory be sold today to raise a trillion dollars in cash

Nothing worth a trillion bucks can be sold today. :)

Also, this does include things like property and equipment ($375bn), which I'm guessing are essential for running the business.

That aside, GOOG does hold $265bn in cash and near cash, which is clearly a lot of money.

I don't get why they do these things like debt issuance and stock dilution if they could just spend some of that cash. Like, what else is it for?

Ad sales fall because the AI mania has made it clear that Big Tech does not care about humans, so humans go elsewhere.

Advertisers on the other hand are alerted to viewbotting with increasingly sophisticated AI "users".

It was clear already two years ago that the model of AI generated "content" that is watched by AI viewbots does not work. Of course Big Tech has to steam forward and find out the hard way.

Congrats, you have ruined the entire SV business model with your fantasies derived from cheap, horribly written SciFi novels.

As sales dropped probably because people ask their AI for answers and searches instead of Google…

Ad sales grew

Much lower than anticipated:

https://finance.yahoo.com/technology/article/google-stock-pl...

So it grew, but it didn't grow fast enough?

This right here is the source of most of humanity's upcoming problems.

Ad sales fall because the AI mania has made it clear that Big Tech does not care about humans, so humans go elsewhere.

This isn't true. Meta ad sales and traffic are surging. This is mostly a problem with Google.

Google makes a shitton of money with the same ol' click ads--same as in 2004. But with a bunch of other stuff added, like AI spending.

1. Cloud killed it.

2. Youtube meh, like always (weird that it doesn't kill it)

3. Search -- this was the issue. QonQ 0.1% <-- the whole story

Everyone has expected Search to, sooner or later, crack. This looks like it may be it.

If Google had 30B in revenue from coding tools and a few billion from Gemini Enterprise then there would be a story that Google could get through this.

But GDM didn't execute. And that's that.

Who knows the bottom. More than 10-15% seems unlikely. But if search cracks again next quarter then we'll see a real revaluing of the business.

Google did not have the proper focus on AI. They should have owned the space. But there were clearly management issues.

Youtube has sucked for many years. I just don't know how much Google is responsible for it. Back in 2006, they were dealing with copyright battles (despite the fact they won their lawsuit against Viacom) so Google bought them to help them out with their resources. The site itself has tons of censorship and bad targeting on the recommended videos and I think Neal Mohan has made it even worse the last few years with more and more ads and Shorts and everything

> Youtube meh, like always (weird that it doesn't kill it)

It's a huuuge training set, why would they kill that?

Kill it as in "awesome financial results"

Although Argon hasn't delivered on coding yet I think that it's just the first checkpoint of the new model family since Hassabis, and I think it's promising, so if they can get a few good checkpoints in and then price gauge anthropic they can get that sweet sweet coding tools subscription revenue. Antigravity is not that bad, pair it with a good model with good limits, ideally slightly cheaper than the X5/x20 sub from Anthropic, and I, for one, would switch.

...and the stock falls 8% in after-hours trading.

this happens a 3-4 times a year and it bounces back within a few months

Depending on how the next trading day goes, this could be a bit more than "this happens about once quarter". From to the FT:

> Its shares fell more than 10 per cent in after-hours trading[...] The share price drop, if sustained, would wipe more than $400bn from the group’s market value, the largest single-day loss in the company’s history.

... and immediately crashed 10% down.

TLDR; Alphabet hit negative free cash flow for the first time ever since going public.

Translation: even Google ... a company that basically has a license to print money (aka Google Search) ... is losing a ton of money on AI.

Negative free cash flow is not the same as losing money

Like others, desperate to make sure they're the next Google.

posting about negative free cash flow seems to be the new tell for those pretending to know what happens next in the AI era. this post included.

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