Google Q3 Earnings Set to Highlight AI Monetization Amid Meta Muse Competition

Key points

• Analysts forecast Google Q3 revenue at $127.8 billion, with advertising sales expected at $83.5 billion.
• Cloud unit revenue is projected to jump 91% to $28.9 billion, driven by AI demand.
• Oracle has become the first company to purchase Google's custom TPUs for its data centers.
• TD Cowen estimates Google's TPU sales could reach $9.4 billion in the second half of 2026.
• Meta's Muse AI agent has reached 10 million users, primarily for shopping, posing a competitive risk to Google Search.

Background

Recent market volatility has highlighted concerns over AI investment returns, particularly after CoreWeave shares dropped due to debt concerns. Meta's Muse AI agent has gained significant traction, surpassing 10 million accounts and driving a 13% surge in Meta's stock earlier this year. However, the platform has faced criticism over privacy and security issues, including rushed fixes for virtual machine vulnerabilities. Google has also been testing broader access for its Gemini app on Mac devices, coinciding with Apple's tightening of permissions to curb AI agent abuse.

Why it matters

Google's earnings will serve as a critical indicator for the broader AI market, demonstrating whether massive infrastructure investments are yielding tangible returns. The success of TPU sales and cloud growth will validate the profitability of AI hardware, while the competitive pressure from Meta's Muse agent will test Google's ability to maintain user engagement and monetization in the evolving landscape of agentic AI.

What to watch

Investors will closely watch Google's post-earnings call for details on TPU sales momentum and Gemini 4 launch plans. The long-term impact of Meta's Muse agent on search usage and online shopping will be a key factor in assessing Google's competitive position. Analysts expect TPU sales to grow significantly, potentially reaching $62.5 billion in 2027 and $138 billion in 2028.