Alphabet sold $12.4 billion of stock and borrowed $29 billion last quarter. The data centers took $51.4 billion.
SummaryA year ago Alphabet was buying back its own shares. In Q3 2026 it bought back none, sold new stock, raised debt, and posted negative free cash flow of $9.1 billion as AI spending outran the cash its business brings in.
· MODEL Editors · 2 min read
Some links may be affiliate links. Disclosure
Alphabet's third-quarter numbers, released Wednesday, October 28, show the AI build-out now costs more than the business throws off in cash. The cash flow statement in its SEC filing tells the story in four lines.
The four lines (quarter ended September 30, 2026).
- Spent on property and equipment, mostly servers, networking and data centers: $51.4 billion, up from $24.0 billion a year earlier.
- Cash from operations: $42.3 billion, down from $48.4 billion a year earlier.
- Stock buybacks: $0, versus $11.5 billion in the same quarter of 2025.
- New money raised: $12.4 billion from issuing common stock and $29.0 billion of new debt.
That leaves free cash flow, which Alphabet defines as operating cash minus spending on property and equipment, at negative $9.1 billion. It was also negative in the second quarter (minus $5.9 billion), so this is two in a row. Over the last 12 months it is still positive, at $19.7 billion.
What Alphabet says. Finance chief Anat Ashkenazi said on the call that the "vast majority" of capital spending went to technical infrastructure for AI, and that the cash hit was made worse by building up inventory for TPU system sales and a $5.2 billion payment for a 2018 European Commission fine. Alphabet kept its 2026 capital spending forecast of $195 billion to $205 billion and said spending will "increase significantly" in 2027, per CNBC. It ended the quarter with $265.1 billion in cash and marketable securities.
The rest of the quarter. Revenue was $127.6 billion, up 25%. Earnings were $2.12 a share; Alphabet says an $8.7 billion loss on equity investments, mainly its SpaceX stake, cut that by $0.55. CNBC reported Search revenue of $63.35 billion, below the $64.96 billion analysts expected. Alphabet ($GOOGL) closed at $324.89 and traded around $292.50 late in extended trading, roughly 10% lower (Yahoo Finance).
Our take. None of this means Google is short of money: $265 billion in the bank is a lot of cushion. The joke is the reversal. A year ago the company had so much spare cash it was buying back its own shares. Now it is selling new shares and borrowing to keep feeding the data centers, and it says next year's bill will be bigger. Investors on Wednesday night wanted to see more of that spending come back as revenue. Not investment advice.
Sources
Not investment advice.
FREE · EVERY WEEK
The top AI tools this week, tested.
Every week MODEL's editors pick the AI tools worth your time, try them hands-on, and tell you what's good, what's not, and who it's for. Free, in your inbox.
Free. Unsubscribe anytime. Our picks are editorial and can't be bought.
Continue
AI News
Anthropic made $17 billion last quarter and still posted an operating loss. The compute bill is why
Anthropic's amended S-1, filed November 2, adds its third-quarter numbers: revenue up about 12x from a year earlier, a swing back to an operating loss, and $895.4 billion in compute and infrastructure commitments.
· MODEL Editors
Funding
OpenAI wanted $30 billion. So far it has about $11 billion.
OpenAI has commitments for roughly $11 billion in its latest round, less than half its first target, at a $1.25 trillion valuation instead of $1.4 trillion, according to the Wall Street Journal. The Financial Times reports the goal is now about $20 billion.
· MODEL Editors
Funding
Kalshi raises $1 billion at a $40 billion valuation, up from $22 billion in May
The prediction-market company's Series G was co-led by Sequoia and Wellington. Kalshi says it will use the money for indices, single-stock perpetual futures and markets on the price of compute.
· MODEL Editors