YouTube Ad Growth Cools to 9% in Third Quarter as Alphabet Falls Short of Earnings Forecasts

YouTube's advertising business kept expanding in the third quarter of 2026, but at a slower rate than in recent periods. Ad revenue on the video platform came to $11.21 billion, up 9.2% from a year earlier and short of analyst projections.

The pace compares with growth of 15% in the same quarter last year, 13% in the second quarter and 11% in the first quarter of 2026. Across Google, total advertising revenue was $80.0 billion, a gain of 10.6%, which means YouTube grew more slowly than the company's ad business as a whole.

Alphabet's overall results also fell short of expectations. The company reported revenue of $127.6 billion, up 25%, and net income of $26.17 billion, down 25%, or earnings per share of $2.12. According to LSEG data, Wall Street had forecast revenue of $128.2 billion and earnings per share of $3.02. Alphabet's third-quarter results included a net loss on equity securities of $8.7 billion.

The standout performer was Google Cloud, where revenue rose 103% to a record $30.7 billion. Sundar Pichai, CEO of Google and Alphabet, said the company is now on a half-trillion dollar revenue run rate. "Our deep full stack approach is driving momentum across the business," he said, adding that AI investments are lifting Search query growth, including commercial queries, at the fastest year-over-year rate in five years.

Beyond advertising, YouTube relies heavily on subscriptions, which Alphabet said brought in more than $60 billion in 2025. During the third quarter, YouTube Music and Premium passed 150 million subscribers worldwide, a figure that includes trials. The service had first crossed 125 million in March 2025. Philipp Schindler, Google's chief business officer, said on the earnings call that subscription revenue is now growing faster than advertising on the platform, and that more than 20 million videos are uploaded to YouTube each day.

Pichai also said the Gemini AI app has reached 1 billion users, calling it the fastest-growing product in Google's history. He noted that at last month's Made on YouTube event in New York, the platform unveiled more than 30 new products, among them a "custom feed" feature that lets users create channels of recommended videos on topics they choose.

Like other major AI infrastructure spenders, Alphabet is investing heavily in capacity. Capital expenditures in the third quarter totaled $51.36 billion, up 114% from a year earlier. In July, the company raised its full-year 2026 capex guidance to between $195 billion and $205 billion, from a prior range of $180 billion to $190 billion, citing AI data center buildouts. That guidance is unchanged, and CFO Anat Ashkenazi said Alphabet still expects capital spending to increase "significantly" in 2027.