Alphabet Inc - Ordinary Shares - Class A
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Earnings Call Q3 2026
October 28, 2026 - AI Summary
Strong financial performance (and what’s driving it):
- Alphabet Q3 revenues: $127.6B, up 25% YoY (reported and constant currency).
- Operating income: $40.6B (+30% YoY), margin 31.8%.
- Main cost pressure: TAC +10% to $16.4B and cost of revenue +24% (notably higher hardware costs tied to TPU system sales and higher depreciation/infra ops).
- Free cash flow was negative (-$9.1B) due to CapEx ramp + TPU inventory build and a $5.2B cash EC fine (2018), though operating cash flow was still strong ($42.3B in the quarter; $179.6B trailing 12 months).
Google Cloud is the standout growth engine (103% growth, record margins):
- Google Cloud revenues: $30.7B, up 103% YoY; growth driven by AI infrastructure + AI solutions + core GCP and TPU system sales.
- Cloud operating income: $11.1B and operating margin: 36.2% (up from 23.7% a year ago).
- Capacity is a constraint/opportunity trade-off: management said third‑party compute capacity came online at the end of Q3, with expected margin headwinds in Q4 as usage ramps.
- Backlog: $561B, with ~55% expected to be recognized as revenue over the next 24 months.
Search momentum is strong, but investors should expect near-term deceleration optics:
- Google Search & other ads: $63.3B (+12% YoY); Company highlights highest query growth rate in ~5 years from AI-driven usage.
- Surprising/negative detail: Search growth is expected to be pressured in Q4 due to (1) FX headwinds and (2) lapping prior acceleration from late 2025 (Anat cited ~“a couple of points” of growth pressure in Q4 vs comparisons).
- Monetization lag is part of the story: growth included AI Mode query mix, where monetization was temporarily lower; however, Google is scaling ads in AI Overviews and AI Mode (including international + multiturn ads) to address this.
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$130.28
54.9% downside
Current Fair Value
54.9% downsideOvervalued by 54.9% based on the discounted cash flow analysis.
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Share Statistics
| Market cap | $3.54 Trillion |
|---|---|
| Enterprise Value | $3.62 Trillion |
| Annual dividend | $0.86 |
| Dividend yield | 0.31% |
| Earnings per Share | $10.91 |
| Beta | 1.21 |
| Outstanding Shares | 12,256,000,000 |
Return
| Return on Equity | 36.80% |
|---|---|
| Return on Assets | 25.56% |
| Return on Invested Capital | 36.40% |
Valuation & Multiples
| P/E Ratio | 14.35 |
|---|---|
| PEG | -58.97 |
| Price to Sales | 7.6 |
| Price to Book Ratio | 5.56 |
| Enterprise Value to Revenue | 7.68 |
| Enterprise Value to EBIT | 12.48 |
| Enterprise Value to Net Income | 15 |
| Total Debt to Enterprise | 0.04 |
| Debt to Equity | 0.2 |
Revenue Sources
No data
Last Earnings Call
Report Date
November 4, 2026
EPS Estimate
$3.02
Consensus analyst estimateRevenue Estimate
$126.16 B
Consensus analyst estimateNext Earnings Call
Expected Date
February 3, 2027
EPS Estimate
$3.14
Consensus analyst estimateRevenue Estimate
$142.52 B
Consensus analyst estimateInstitutional Put/Call Ratio
Compares institutional put options with call options. At 6.02, the ratio is above 1, so institutions hold more puts than calls. That is a more cautious stance.
| Put/Call Ratio | 6.0178▲ 526.76% |
|---|---|
| Total Calls | 346,123▼ 99.73% |
| Total Puts | 2,082,900▼ 97.87% |
Institutional Ownership
Holdings and activity of institutional investors.
| Ownership % | 2.29%▼ 36.94% |
|---|---|
| Total Invested | $95.40B▼ 94.37% |
| Investors Holding | 2,650▼ 3413.00% |
About Alphabet Inc
135,301 employees
CEO: Sundar Pichai
Larry Page and Sergey Brin founded Google in September 1998. Since then, the company has grown to more than 130,000 employees worldwide, with a wide range of popular products and platforms like Search, Maps, Ads, Gmail, Android, Chrome, ...