TLDR
- Alphabet reported $119.8 billion in second-quarter revenue, up 24% year over year.
- Google Cloud revenue surged 82% to $24.8 billion, beating market expectations.
- GOOGL stock closed at $342.09, down 1.46% before volatile after-hours trading.
- Alphabet’s capital expenditures doubled to $44.9 billion during the quarter.
- Investors focused on Alphabet’s higher $195 billion to $205 billion AI spending forecast.
Alphabet reported stronger second-quarter revenue and rapid Google Cloud growth, but investors focused on rising AI spending and negative free cash flow.
Alphabet Revenue Beats Expectations
Alphabet posted second-quarter revenue of $119.8 billion, up 24% from a year earlier and above Wall Street estimates. The results marked another quarter of double-digit growth for the Google parent as Search, YouTube, and Cloud all expanded.
Alphabet Class A stock closed the regular session at $342.09, down 1.46%. Shares moved in volatile after-hours trading as investors weighed strong revenue against higher capital spending tied to artificial intelligence infrastructure.
Google Services revenue rose 15% to $94.5 billion. Search and other revenue increased 17% to $63.3 billion, while YouTube advertising revenue climbed 13% to $11.1 billion.
Total operating income rose 30% to $40.8 billion, and operating margin improved to 34% from 32% a year earlier. Alphabet also reported net income available to common shareholders of $112.1 billion, with diluted earnings of $9.11 per share.
Google Cloud Growth Leads the Quarter
Google Cloud delivered the strongest growth among Alphabet’s main businesses. Revenue jumped 82% to $24.8 billion, topping expectations as demand grew for AI infrastructure, enterprise cloud services, and core computing products.
Cloud operating income more than tripled to $8.8 billion, compared with $2.8 billion a year earlier. The cloud backlog also rose to $514 billion, up from $460 billion in the prior quarter.
Alphabet CEO Sundar Pichai said Gemini models are now processing 22 billion API tokens per minute. The Gemini app also reached 950 million monthly active users, showing wider adoption across consumer and enterprise products.
Pichai said nearly 90% of Fortune 100 companies are using Gemini Enterprise. He also said, “There are many areas where we are still at the frontier,” while adding, “There are areas where we need to improve.”
The company recently introduced cheaper Gemini models, including Gemini 3.6 Flash, Gemini 3.5 Flash-Lite, and Gemini 3.5 Flash Cyber. The new products target lower-cost AI use, cybersecurity work, and enterprise adoption.
AI Spending Keeps Investors Cautious
Alphabet generated $39.1 billion in operating cash flow during the quarter. However, free cash flow turned negative at $5.9 billion as capital expenditures doubled to $44.9 billion.
The company’s AI spending became a central focus after full-year capital expenditure guidance moved toward the $195 billion to $205 billion range. Much of the spending is tied to data centers, custom AI chips, and global computing capacity.
Portfolio manager Brian Mulberry said, “The 200 was the do-not-cross line,” referring to investor concern around Alphabet’s rising capex forecast. He also said, “You can’t be offloading this much cash and not talk about it.”
Truist analyst Youssef Squali said higher spending could make 2027 estimates more difficult to assess. He said, “I think the market needs to digest that for a little bit.”
Alphabet’s reported profit also included a roughly $99 billion gain on equity securities, which contributed $77.1 billion to net income. That gain helped lift earnings but did not come from core operations.
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