Alphabet Set to Report Q3 Earnings as Investors Eye AI Momentum
Alphabet (GOOG, GOOGL) is scheduled to release its third-quarter earnings after the market close on Wednesday, October 28, 2026, with Wall Street keenly focused on the company's artificial intelligence growth trajectory and the emerging competitive threat from Meta's new Muse AI agent. Google stock rose 1.6% in premarket trading ahead of the release, reflecting cautious optimism despite broader market jitters.
Analysts expect Alphabet to report earnings per share of $3.01 on revenue of $127.8 billion, according to Yahoo Finance. Revenue excluding traffic acquisition costs is projected at $111.2 billion. The advertising segment is anticipated to deliver $83.5 billion in sales, while the cloud unit is forecast to surge 91% year-over-year to $28.9 billion. The report comes as investors oscillate between enthusiasm and anxiety over the massive capital expenditures hyperscalers are pouring into AI infrastructure.
TPU Sales Emerge as Key Catalyst
A significant new revenue stream could come from Google's custom Tensor Processing Units (TPUs). On Tuesday, Oracle announced it will become the first company to purchase Google's AI processors for use in its own data centers. TD Cowen analyst John Blackledge estimates Google will generate $9.4 billion in TPU sales in the second half of 2026, with projections soaring to $62.5 billion in 2027 and $138 billion in 2028. BofA Global Research analyst Justin Post noted that "near-term, we think TPU sales-driven upside, a competitive agentic offering, and broader Gemini 4 launch could be catalysts" for the stock.
Context: AI Trade Under Scrutiny
The earnings report arrives at a pivotal moment for the AI trade. Last week, investors dumped shares of CoreWeave over concerns about its massive debt load, sending ripples through the broader market and underscoring how sensitive investors have become to the financial engineering underpinning the AI boom. The episode highlighted the market's fragile confidence in whether hyperscalers' vast investments will ultimately pay off.
Meanwhile, competition is intensifying. Meta's new Muse AI agent has already attracted 10 million users, with the majority accessing the app for shopping, according to CEO Mark Zuckerberg. If Muse continues to expand, it could pose a long-term threat to Google's core search and advertising business. "Search usage [and] growth is back in focus given Muse launch and challenges Google could face in migrating users to agentic while maintaining strong monetization," Post wrote in his investor note.
Broader Market Waits on Fed Decision
Alphabet's report coincides with Microsoft's earnings and the Federal Reserve's policy decision, both due Wednesday. Tech stocks have risen for three consecutive days, with the tech sector extending gains as chip giants Nvidia, AMD, and Broadcom all advanced. The broader market is anticipating a hawkish tone from Fed Chair Kevin Warsh, even as most participants expect policymakers to hold rates steady. The optimism in tech was further fueled by SK Hynix's blockbuster quarter, which saw profits increase sevenfold, signaling continued strength in the semiconductor space.
Perspective: A Test for the AI Trade
Alphabet's earnings will serve as a critical barometer for the entire AI investment thesis. With the CoreWeave selloff fresh in investors' minds, the market is demanding tangible proof that AI spending is translating into real revenue. Google's ability to monetize its TPU hardware through third-party sales—a strategy that mirrors Nvidia's successful merchant silicon model—could reshape its growth narrative and provide a buffer against advertising cyclicality.
At the same time, the rise of Meta's Muse underscores a broader shift toward agentic AI interfaces that could disrupt traditional search monetization. How Alphabet navigates this transition—while defending its search dominance and scaling its cloud and AI offerings—will determine whether GOOG stock can sustain its recent momentum. As James "Rev Shark" DePorre of TheStreet noted, no one has an edge in guessing how a stock will react to earnings; the edge comes from having a plan for every outcome. For investors in Alphabet, that plan may hinge on whether the company can convincingly articulate its AI monetization roadmap in the face of mounting competition.
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