Alphabet spends $51.4B in a quarter, burns $9.1B cash

Google is now spending more on its buildout than its business brings in.

Alphabet reported third-quarter results on Oct. 28. Purchases of property and equipment, its capital spending, were $51.4 billion, up from $24.0 billion a year earlier. Operating cash flow was $42.3 billion.

Free cash flow was negative $9.1 billion.

The numbers behind the burn

Revenue rose 25% to $127.6 billion, according to the release. Google Cloud more than doubled, up 103% to $30.7 billion, and Alphabet says sales of TPU systems were a meaningful contributor. Google Services grew 11% to $96.3 billion, with Search and other up 12%.

Operating income rose 30% to $40.6 billion, a 31.8% margin. Net income fell anyway, to $26.5 billion from $35.0 billion, mostly because of an $8.7 billion loss on equity securities against a $10.7 billion gain a year earlier. Interest expense rose to $967 million from $143 million.

Alphabet also gave usage numbers. It says the Gemini app has reached one billion users, and its first-party model APIs process nearly 32 billion tokens a minute, more than four times the rate a year ago.

Investors focused on the spending. Alphabet's stock fell about 7% in after-hours trading, Semafor reported.

Microsoft spent less and was rewarded for it

Microsoft reported the same afternoon. Its fiscal first-quarter release shows revenue of $92.3 billion, up 19%, with Azure up 48% and Microsoft Cloud at $63.9 billion. Additions to property and equipment were $39.4 billion, up from $19.4 billion. Commercial remaining performance obligation, the contracted revenue not yet recognized, rose 73% to $677 billion.

Both companies roughly doubled their spending from a year ago. The difference is the cushion. Microsoft can point to $677 billion in contracts. Alphabet's cash flow went below zero.

What this means for your AI bill

Yes, Google Cloud grew 103%. Demand is real. That isn't the question.

The question is who pays for capacity built ahead of demand. Today it is Alphabet's balance sheet. Tomorrow it could be your rate card. The compute behind every cheap inference call has to earn its money back somewhere.

Google is still cutting prices on its models, including Gemini 4 Argon's half-price offer and Gemini 4 Carbon's intro rate, which doubles after the intro period. Intro prices are when you get the best terms.

If an AI provider's price is part of your margin, get a contract where one is offered. If not, make sure your app can switch providers without a rewrite.

Watch the next guidance

Alphabet's release gave no new capital spending forecast. The next number to watch is any 2027 forecast on future calls, and whether Cloud's growth keeps pace with the spending.

Then watch the price list after the intro periods end.