Google AI boom fuels fastest search growth in five years as Gemini hits 1 billion users

Alphabet reported that AI investments drove Google search query growth to its fastest pace in five years, with Gemini reaching 1 billion users, according to its Q3 2026 financial report. Google Cloud revenue more than doubled, but capital expenditures surged, pressuring cash flow. Consolidated revenue rose 25% year-over-year to $127.6 billion, while operating profit grew 30% to $40.6 billion. Net income fell from $35 billion to $26.2 billion due to negative other income of $8.2 billion. Capital expenditures hit $51.4 billion, up 114%, with $195-205 billion planned for 2026, resulting in negative free cash flow of about $9.1 billion. Google Cloud revenue grew 103% to $30.7 billion with backlog obligations of $561 billion. Advertising revenue reached $82 billion, below analyst expectations, while YouTube ad growth slowed to 9.2%. YouTube subscriptions surpassed 150 million, and Gemini's APIs process nearly 32 billion tokens per minute.