Alphabet (GOOGL) is preparing to release its third-quarter 2026 earnings on October 28. Analysts expect earnings of $2.94 per share, up slightly from earlier estimates, and representing a 2.44% year-over-year increase. Revenue is projected to hit $111.64 billion, a 27.63% rise from the same period last year.
The company's strong performance is expected to be driven by its cloud and search divisions. Google Cloud revenues surged 82% year over year in the second quarter, reaching $24.77 billion, with a backlog of $514 billion. Search and other revenues also increased 17% year over year to $63.27 billion, supported by AI-powered advertising improvements.
YouTube advertising revenues grew 13% year over year to $11.06 billion in the second quarter, benefiting from direct-response campaigns and brand advertising. The adoption of Gemini across consumer and enterprise applications is also expected to have supported Alphabet's performance, with Gemini API usage reaching approximately 22 billion tokens per minute.
Despite these strengths, Alphabet shares have underperformed the broader Zacks Computer & Technology sector, climbing just 3.8% year to date. The stock is currently trading at a premium, with a forward 12-month price/sales ratio of 7.38X, compared to the sector's 5.72X. However, Alphabet's integrated AI portfolio and expanding cloud backlog offer significant growth opportunities.