Alphabet reported Q3 2026 revenue of $128 billion, up 25% year-over-year, and net income of $26 billion, though the latter fell nearly $9 billion below the prior year. The stock dropped approximately 12% post-earnings as EPS of $2.12 missed the $3.02 consensus. Cloud revenue reached $30 billion, exceeding estimates by roughly $1 billion. Search volume grew 12% year-over-year, a deceleration from 17% in Q2 and 19% in Q1, while search revenue remained flat. Chief Business Officer Philipp Schindler acknowledged that AI Mode queries generate less revenue per query than traditional web search due to fewer ads and lower ad pricing. Despite this monetization gap, Alphabet plans to increase AI spending in 2027. The company is addressing the shortfall by expanding ad placements within AI search results, aiming to close the revenue disparity as it continues shifting its core search platform to Gemini-powered generative models.