GOOG · 10-Q · 2026Q1 · Full report
Cost of Revenues / Gross Margin Drivers
Alphabet Inc. · 2026-04-30 · Importance 54 · Surprise 40 · No source text
Total cost of revenues was $41.3 billion for the three months ended March 31, 2026, up $4.9 billion (14% YoY). Traffic acquisition costs (TAC) increased $1.5 billion but the TAC rate fell from 20.6% to 19.7% due to a revenue mix shift from Google Network to Google Search & other. Other cost of revenues rose $3.4 billion, primarily from higher depreciation, YouTube content acquisition costs, and employee compensation. The increase was partially offset by an accrual reversal for a digital services tax in Canada.
Key facts
- Total cost of revenues was $41.3 billion for the three months ended March 31, 2026, an increase of $4.9 billion year over year. source
- TAC was $15,228 million for the three months ended March 31, 2026. source
- Other cost of revenues was $26,043 million for the three months ended March 31, 2026. source
- The TAC rate decreased from 20.6% to 19.7% year over year from the three months ended March 31, 2025 to March 31, 2026. source
Impact estimates
| metric | direction | stage | expected | basis |
|---|---|---|---|---|
| operating_income | negative | realized | -4.5% | Total cost of revenues was $41.3 billion for the three months ended March 31, 2026, an increase of $4.9 billion year over year. |
| operating_income | negative | realized | — | TAC was $15,228 million for the three months ended March 31, 2026. |
| operating_income | negative | realized | — | Other cost of revenues was $26,043 million for the three months ended March 31, 2026. |