Google Q3 Revenue Hits Record $128B as AI Capex Turns Free Cash Flow Negative

Google Q3 revenue rose 25% to a record $128B, but a net loss on equity investments and a sharp AI capex increase pushed free cash flow to -$9B.
US September PCE inflation met expectations, Q3 GDP beat at +3.4%, and markets priced an 86% chance of a rate hike at the next meeting.
Aswath Damodaran said Anthropic filed for IPO on October 26, 2026, and put his equity valuation at about $1.475T.
Serval raised a $150M Series C at a $3B valuation, its third round in 12 months, with Sequoia leading.
Spruce Point Capital flagged a cash-flow reversal at Bunge and a major production-data restatement at IperionX.
Charlie Bilello noted US money supply grew 5.7% year over year, the fastest pace since May 2022.
Harvey is adding Glean co-founder Piyush and the Aida team to build a private enterprise context layer.

Google reported Q3 revenue of $128B, up 25% year over year and a record, with operating income up 30% to $410B and net income down 25% to $260B on an $8B unrealized equity-investment loss tied to SpaceX's Q3 decline; cloud revenue rose 103% to a record $31B. Free cash flow was -$9B as property and equipment spending rose 114% to $51B, which the author described as Google's largest free-cash-flow drop and its second quarterly decline after Q2 — via 1 2

The Fed held rates steady with two dissents and a statement revised from the prior month; CME FedWatch showed markets pricing an 86% chance of a hike at the next meeting. The Fed is moving to a 7/1 and 6/2 meeting schedule for 2027 and 2028, and Warsh said fewer meetings could mean larger moves and more rate-market volatility, especially if forward guidance keeps shrinking — via 1 2 3 4
September PCE rose 0.5% month over month and 3.6% year over year, with core PCE at 0.3% and 3.1%, all in line with expectations; personal income rose 0.2%, spending 0.5%, and the savings rate fell to 3.8%. Q3 GDP rose 3.4% annualized against a 3.2% estimate, personal consumption rose 3.8%, and information-processing equipment contributed 0.86 percentage points to real GDP — via 1 2 3 4 5 6
AI-driven inflation eased in September, contributing just 0.82 basis points to headline PCE versus a December peak of 4.60; capital-goods imports rose 7.5% month over month on AI investment, a main driver of the worsening goods trade deficit, and nonresidential capex was strong while net exports remained a drag because AI buildout relies heavily on imports — via 1 2 3

Aswath Damodaran said Anthropic filed for IPO on October 26, 2026, and estimated its equity at about $1.475T, a figure he will use to decide whether to buy or sell the stock; he advised investors to value it themselves and said he would provide a narrative framework and input structure — via 1 2
Serval raised a $150M Series C at a $3B valuation led by Sequoia, its third round in 12 months and $277M raised in total; the company said headcount grew 10x over the past year, named Fox Corporation, WPP, Live Nation, Lucid Motors and Ramp as customers, and plans to hire more than 500 people while expanding in San Francisco, New York, London and Austin — via 1
Harvey is adding Piyush, a Glean co-founder, and the Aida team to build a private enterprise context layer that connects all data into company-owned IP, aims to improve agent and model performance, stays private and portable through an API, and supports on-premises deployment for companies wanting full control — via 1

Spruce Point Capital said Bunge cut guidance for two high-margin segments, raised its interest-expense assumption after heavy borrowing, and saw operating cash flow swing from +$854M to -$1.2B, producing no cash for the year while still paying dividends and buying back stock via credit facilities and maintaining a $9.50 adjusted EPS guide. It also questioned IperionX's titanium powder output, saying a reported 1.4 tons for the June quarter conflicts with a prior monthly chart implying well above 4 tons, a restatement of more than 70%, and noted rising inventory, no commercial sales and accumulated losses — via 1 2
Charlie Bilello said US money supply grew 5.7% over the past year, the largest year-over-year increase since May 2022, and described money printing as reaccelerating; he also said the value of stocks and mutual funds held by US households more than doubled over the past decade — via 1 2
Ben Carlson noted five of the Magnificent Seven were in double-digit drawdowns: NVDA -11%, AMZN -14%, TSLA -18%, META -22% and GOOG -30%, commenting that some assets always fall during an AI boom — via 1

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