Alphabet (GOOGL) is poised to release its third-quarter 2026 earnings on October 28. Analysts expect earnings of $2.94 per share, reflecting a 2.44% year-over-year increase, while revenue is projected at $111.64 billion, up 27.63% from the same period last year. The company has a strong track record of beating earnings estimates, with an average surprise of 86.65% over the past four quarters.
The third-quarter performance is anticipated to be driven by robust demand for Google Cloud, fueled by AI infrastructure, enterprise solutions, and core services. Cloud revenues surged 82% year over year in the second quarter, reaching $24.77 billion, with a backlog of $514 billion. Google Search & Other is also expected to remain a key revenue contributor, supported by increasing search activity and AI-powered advertising improvements.
YouTube advertising revenues are projected to have grown, supported by direct-response campaigns, brand advertising, and connected television. Additionally, the increasing adoption of Gemini across consumer and enterprise applications is expected to have bolstered Alphabet's performance. However, higher depreciation, energy expenses, and AI-related hiring are likely to have pressured operating margins.
Despite a 3.8% year-to-date gain, Alphabet's shares have underperformed the broader Zacks Computer & Technology sector, which has returned 18%. GOOGL shares trade at a premium with a forward 12-month price/sales ratio of 7.38X, compared to the sector's 5.72X. However, the company's integrated AI portfolio and expanding TPU business offer significant growth opportunities.