Alphabet Q3: Search ads grow 12%, YouTube ads slow to 9% as Cloud doubles.

Alphabet reported third-quarter revenue of $127.6bn on 28 October, up 25% on a year earlier and its 13th straight quarter of double-digit growth. Most of that came from Google Cloud, which doubled. The advertising business that pays for most of Google's products grew far more slowly, at about 11%.

For marketers the useful numbers are in the detail. Search held up, YouTube ads slowed, and the quarterly filing released alongside the results shows Google's ad clicks growing more slowly than in the first half of 2026 while prices kept rising.

The headline numbers

All figures are for the quarter to 30 September, compared with the same quarter of 2025, from Alphabet's earnings release.

• Total revenue: $127.6bn, up 25% (also 25% at constant currency).
• Google Search & other: $63.35bn, up 12% from $56.57bn.
• YouTube ads: $11.21bn, up about 9% from $10.26bn.
• Google Network (ads on partner sites and apps): $7.46bn, up about 1% from $7.35bn.
• Google advertising in total: $82.0bn, up about 11% from $74.2bn.
• Google subscriptions, platforms and devices: $14.29bn, up 11%.
• Google Cloud: $30.7bn, up 103%.
• Operating margin: 31.8%, with operating income up 30%.
• Net income available to shareholders: $26.2bn, down from $35.0bn, mainly because of an $8.7bn loss on equity investments.

Capital spending reached $51.4bn in the quarter, more than double the $24.0bn of a year earlier, which left free cash flow at minus $9.1bn. Traffic acquisition costs, the money Google pays partners such as browser and phone makers for searches, rose to $16.4bn from $14.9bn.

By region, US revenue grew 39%, against 9% in Europe, the Middle East and Africa, 12% in Asia-Pacific and 17% in other parts of the Americas. Alphabet does not give separate figures for the Gulf.

What the filing adds on clicks and prices

The earnings release left out Google's ad volume and price measures. According to PPC Land's reading of the Form 10-Q, also dated 28 October:

• Paid clicks on Google Search and other Google properties rose 8% in the quarter, against 11% for the first nine months of the year.
• Average cost per click rose 4%, the same rate as over nine months.
• On partner sites in the Google Network, impressions fell 14% while the price per impression rose 14%.
• Network growth came from AdMob, Google's in-app ad business, while AdSense, which serves websites, shrank.
• YouTube's ad growth was led by brand advertising, followed by direct response.

That sits awkwardly with the release, where chief executive Sundar Pichai says Search query growth is the highest in five years and that AI is driving more commercial queries. More searches but slower click growth suggests that a rising share of searches, possibly in AI answers, carry fewer ads or none. The filing does not give a query count, so the share of searches ending in a paid click cannot be worked out.

Pichai also said the Gemini app has reached one billion users and that YouTube Music and Premium passed 150 million subscribers, including trials.

What it means for marketers

Search is still growing at double digits, and advertisers are paying more for each click. A 4% rise in average cost per click, at a time when click growth is slowing, means the auction is getting more expensive for the same volume. Advertisers who have handed bidding and budgets to Google's automated products should watch their own cost per click closely, since Alphabet's average mixes every market, device and property.

YouTube growing at about 9%, slower than Search, matters for brands that have moved budget there for reach. the filing says brand advertising led the growth, which fits with YouTube pushing TV-style buys and creator content to brand marketers, including in Saudi Arabia, where its Shopping affiliate programme launched this week.

The steady decline of AdSense is the clearest sign yet that ads on the open web, the sites that depend on Google Search traffic, are shrinking inside Google's own business. Publishers in the region who rely on AdSense should expect that pressure to continue.

Finally, the size of Google's AI spending is now the main story for investors. For advertisers it means more AI features in Search and more automation in Google Ads, because Alphabet needs those investments to pay back. Expect the push to continue in 2027.

Sources

• Alphabet, "Alphabet Announces Third Quarter 2026 Results" (Exhibit 99.1, Form 8-K), 28 October 2026
• PPC Land, "Google ad clicks gain 8% in Q3, slower than 11% over nine months", 29 October 2026