Alphabet’s Q2 earnings revealed $119.8 billion in revenue on Wednesday, up 24% from a year earlier and above Wall Street’s $116.5 billion estimate. Google Cloud led the beat, growing 82%.

The results, posted after the closing bell, show AI demand lifting Google’s cloud business as record spending and a delayed AI model keep investors cautious.

Cloud Revenue Drives Alphabet’s Q2 Earnings

Google Cloud revenue jumped 82% to $24.8 billion, up from $13.6 billion a year earlier. Analysts had forecast 64% growth.

Cloud is Alphabet’s clearest tie to enterprise AI demand, and its growth outpaced rivals Amazon and Microsoft. Demand for Alphabet’s custom AI chips is helping.

Google Search revenue grew 17% to $63.3 billion, roughly in line with estimates, as AI Overviews drew more ad dollars.

Where Alphabet’s AI Spending Is Going

Capital expenditures reached $44.9 billion in the quarter, double the year-ago figure and above estimates. Alphabet held its full-year capex guidance at $180 billion to $190 billion for 2026. Most of that funds data centers and the custom chips that train and run AI models.

The scale keeps widening. Alphabet closed a $29.5 billion purchase of cloud security firm Wiz this year, and in June agreed to pay SpaceX about $920 million a month for AI compute. Finance chief Anat Ashkenazi has signaled 2027 spending will climb toward a roughly $257 billion consensus.

Investors wanted proof the outlay converts to revenue. Cloud backlog, a measure of signed future business, rose to $514 billion, and cloud sales grew 82%. Free cash flow fell 47% from a year earlier last quarter.

Reported profit hit $112.11 billion, up 298%. Most came from a roughly $99 billion gain on equity securities tied to Anthropic and SpaceX stakes, not operations.

Alphabet’s own AI has stumbled too. It delayed the June launch of its Gemini 3.5 Pro model, while OpenAI and Anthropic kept shipping enterprise upgrades.

How Will Google Stock React?

GOOG shares closed down 1.2% at $341.91 on Wednesday. In extended trading the reaction was choppy, first dropping more than 1% before recovering to trade slightly higher, near $344.

The stock is up 11% in 2026 but has slid since April, a drop flagged in Google’s earnings preview and echoed across this week’s tech earnings.

“Our AI investments are redefining what’s possible across every part of our business,” Sundar Pichai, Alphabet’s chief executive, said in a statement.

Microsoft and Amazon report next week. With revenue accelerating but profit flattered by paper gains, the market’s verdict may hinge on 2027 spending signals.

Source: BeInCrypto