Alphabet's “Other Bets”, which includes Waymo, Verily, Fiber, and others, had a Q3 operating loss of $1.1B, an increase from $941M YoY, on revenues of $178M
Abner Li / 9to5Google :
Context & Ripple Effects
This is the latest entry in a now-familiar quarterly ritual: since early 2019, Alphabet's Other Bets have reported sub-$200M revenues against losses approaching or exceeding $1B every quarter. The year-ago Q3 loss of $941M has now widened to $1.1B even as revenue grew from $155M to $178M, and the immediately preceding quarter was little different — a $1.12B loss on $148M of revenue.
What makes the pattern sustainable is the rest of Alphabet's balance sheet: per the related reporting, investment gains accounted for 71% of Alphabet's Q2 profits, and the company is planning twice-yearly US debt issuance alongside massive AI data center commitments. Other Bets is a rounding error against those sums — which is precisely why the burn rate persists without forcing a reckoning at Waymo, Verily, or Fiber.
First-order effects
- Alphabet's core advertising business is absorbing an accelerating burn: the combined quarterly shortfall across Waymo, Verily, Fiber and siblings rose from $727M in late 2018 territory to a steady $1B-plus run rate through 2019 and 2020.
- Investors get another data point that none of the bets has broken out commercially — revenue of $178M against a $1.1B loss implies roughly six dollars lost per dollar earned, worse than the year-ago ratio.
Second-order effects
- With Alphabet leaning on investment gains for 71% of Q2 profits and preparing a twice-annual debt issuance program, the marginal funding for moonshots increasingly comes from capital markets and portfolio appreciation rather than operating cash — insulating Other Bets from any internal push to cut losses.
- Each unit inside Other Bets faces implicit pressure to attract outside capital on its own merits, since the segment-level numbers give Alphabet no visibility argument for which of Waymo, Verily, or Fiber deserves continued subsidy.
Third-order effects
- If the ~$1.1B-per-quarter cadence holds — as four straight quarters in this corpus suggest it will — Other Bets hardens into a fixed ~$4-5B annual cost of Alphabet's optionality strategy, tolerable only for as long as the core business generates surpluses of Alphabet's current scale.
- Persistent aggregate losses with no breakout economics invite growing calls for Alphabet to disclose unit-level financials or restructure the bets, a tension that will sharpen whenever core advertising growth slows.
The trend: Alphabet's moonshot portfolio is settling into a permanently subsidized ~$1B-quarterly-loss structure, bankrolled by advertising profits, investment gains, and new debt capacity rather than by any path to standalone profitability.