Alphabet Inc.

(NASDAQ Global Select)
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Bullish +65

Prediction: Alphabet Will Report Google Cloud Revenue Growth Exceeding 100% on Oct. 28.

AI infrastructure Cloud expansion Earnings report AI-generated analysis

πŸ“… Alphabet is scheduled to report Q3 earnings on October 28, with Google Cloud expected to become the largest driver of operating income growth.

πŸ’° Google Cloud revenue is predicted to more than double in Q3 following an 82% growth rate in the second quarter.

πŸ—οΈ Alphabet has accelerated capital expenditures since early 2025, creating a lag effect that should boost monetization and revenue in Q3.

πŸ“¦ Management expects to recognize half of its $514 billion revenue backlog over the next 24 months, averaging $32 billion per quarter.

🀝 Alphabet plans to expand third-party capacity usage in Q3 as a bridging strategy while building internal AI infrastructure.

πŸ’» The company intends to sell custom TPU chips directly to third parties, adding to revenue beyond its own cloud usage.

πŸ“‰ Alphabet reported negative free cash flow for the first time as a public company last quarter due to heavy AI spending.

πŸ“Š Shares currently trade at 26 times forward earnings, the lowest multiple among the big three public cloud platforms.

πŸš€ Google Cloud is growing faster than competitors while Search continues to generate substantial and growing operating income.

Bullish Signals
  • Google Cloud revenue is predicted to exceed 100% year-over-year growth in Q3, driven by accelerated capital spending and high utilization rates.
  • The company has a massive $514 billion revenue backlog, with management expecting to recognize half of it over the next 24 months.
  • Alphabet plans to sell custom TPU chips directly to third parties, which should provide a significant step-up in revenue from Q2.
  • Google Cloud is growing faster than competitors despite trading at a lower valuation multiple than peers.
  • Management expects customers to exceed their commitments by more than 50%, pushing the average quarterly backlog recognition closer to $50 billion.
Risk Factors
  • Alphabet reported negative free cash flow for the first time as a public company last quarter, with expectations that it will fall deeper into the red in Q3.
Full Analysis
Alphabet (NASDAQ: GOOG) is preparing to report its third-quarter earnings on October 28, with significant investor focus on the Google Cloud segment. The company is projected to see Google Cloud revenue growth exceeding 100% year-over-year, driven by accelerated capital expenditures on AI capacity and high utilization rates due to ongoing constraints. Key drivers for this growth include a massive backlog of $514 billion, with management expecting to recognize half over the next 24 months. Additionally, Alphabet plans to offload workloads to third-party neocloud providers in Q3 as a bridging strategy and intends to sell custom TPU chips directly to third parties, which should provide a revenue step-up. Despite the strong growth trajectory, investors remain concerned about Alphabet's negative free cash flow, which deepened last quarter and is expected to worsen temporarily due to heavy AI spending. Consequently, shares trade at 26 times forward earnings, the lowest multiple among major public cloud platforms, even though Google Cloud is growing faster than competitors. Analysts believe that once the current heavy investment phase stabilizes, Alphabet's superior capital efficiency and TPU popularity will allow it to produce high returns on invested capital. The article concludes that Alphabet appears to be the best cloud provider to buy right now as its cloud revenue is set to drive earnings significantly higher in the coming quarters.