YouTube’s living room TV viewership now brings in one-third of its ad revenue

YouTube clocked $11.2 billion in ad revenue in Q3 2026, a 9% year-over-year rise. It’s also reached a record-high number of Premium and Music subscribers–150 million people.

But other parts of Alphabet‘s business aren’t faring so well.

The company’s stock sank 10% after Q3 earnings missed both revenue and profit expectations, and revealed that for the second quarter in a row, hefty AI spending has kept cash flow in the negative.

Alphabet posted revenue of $127.6 billion, compared to analysts’ expected $128.2 billion, and reported negative cash flow of $9.07 billion.

You may remember that Alphabet’s Q2 earnings cast a pall: It posted negative cash flow for the very first time since Google went public in 2004. Analysts expected it would come nearer to breaking even in Q3, but instead, cash burn worsened. At -$9.07 billion, it’s wrapping up Q3 with capex $5.9 billion further into the red than they were in Q2.

And things are only going to get worse. Anat Ashkenazi, Alphabet’s Chief Financial Officer, told investors Alphabet “continue[s] to expect our CapEx to increase significantly in 2027” as it pays for everything associated with AI, including R&D and building out more cloud computing capacity.

Let’s go back to YouTube, though.

Philipp Schindler, Alphabet’s CBO, said living room TV viewership now accounts for a meaty one-third of YouTube’s total ad revenues.

He pointed to deeper brand partnerships between Google and advertisers as the “largest contribution” to ad growth, and gave a nod to YouTube Shopping’s partnership with Amazon–the latest component of YouTube’s many-years-in-the-making attempt to turn itself into an ecom hub.

“Our YouTube Creator Partnerships program connects brands with over 3 million creators to drive highly effective campaigns. Brands like Lexus continue to partner with creators like Colin and Samir, driving an 11% lift in brand consideration,” Schindler said.

He also brought up YouTube Premium subscriptions, which contribute to the platform’s overall income but are not separated out into their own figure during earnings. Schindler hinted that the lower-cost Lite version has played a role in pushing subscriptions up to their current high.

“With Premium and Premium Lite, viewers have choice,” he said. “As more people opt into premium experiences, it’s a win for viewers, creators, and our business. Subscriptions help fund the creator ecosystem and drive the platform forward.”

No word on cash from more direct creator support mechanics like Channel Memberships, Super Thanks, and Super Chats (YouTube takes a 30% cut from all of those). Alphabet’s call firmly focused on how it wants more advertising and AI money. Judging by Ashkenazi’s comments, the latter will be a long time coming.

“Our commercial priorities are clear. Expanding advertiser ROI, systematically advancing our AI monetization efficiency, and scaling our ecosystem partnerships to support the next era of discovery,” Schindler said in his wrap-up.

For his part, Alphabet/Google CEO Sundar Pichai barely addressed YouTube. He mentioned the 150 million Premium subscribers and the living room TV ad contribution, but otherwise pointed anyone who cares about creators to YouTube’s recent Made On presentation.

“At Made on YouTube last month, we announced more than 30 products and features for creators and viewers. One great example is custom feeds, where you can simply pick a topic you love and get a tailored video home feed based on that topic,” he said, before changing the topic to Alphabet’s robotaxi company Waymo.

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