Alphabet Q3 Earnings: YouTube Ad Revenue Misses Expectations, Shares Drop Over 10% After-Hours
Alphabet reported $11.2 billion in Q3 YouTube ad revenue, falling short of the $11.43 billion analyst consensus as growth slowed to 9%, causing shares to drop over 10% in after-hours trading.
US tech giant Alphabet (Google's parent company) disclosed in its Q3 2026 earnings report that advertising revenue for its video platform YouTube reached $11.2 billion, a 9% increase year-over-year. This figure fell short of the $11.43 billion analyst consensus estimate, and the growth rate slowed from 13% in the previous quarter. Following this news, Alphabet's shares dropped more than 10% in after-hours trading.
Despite the underperformance in advertising, YouTube showed momentum in other areas. The company stated that subscribers for YouTube Music and Premium now exceed 150 million, up significantly from 125 million in March 2025, noting that the subscription business is growing faster than ads. Additionally, according to Nielsen data, YouTube's share of US television viewership was about twice that of Netflix. Google Chief Business Officer Philipp Schindler noted that over a third of YouTube's Q3 ad revenue came from living room devices.
This earnings release comes amid intensifying competition in the streaming industry. Rival Netflix lowered its full-year ad revenue forecast last week from $3 billion to $2.7 billion due to delays in rolling out its ad products. Meanwhile, Instagram announced a major overhaul of its long-form video features this week, designed to directly challenge YouTube and bolster its presence on TV screens. Ross Benes, a senior analyst at EMARKETER, commented that everyone in streaming is chasing YouTube's success, with even Instagram pivoting its strategy based on YouTube's performance.