Alphabet, Google's parent company, reported second-quarter revenue of $119.8 billion, up 24% year-over-year; operating income of $40.8 billion, an increase of 30% year-over-year; and net income of $112.1 billion, a surge of 298% year-over-year, driven by a sharp rise in equity earnings from investments such as Anthropic. Google Cloud generated revenue of $24.8 billion, significantly exceeding the market expectation of $22.5 billion and marking an 82% year-over-year increase. Capital expenditures totaled $44.9 billion, surpassing the market forecast of $44.2 billion. The CEO stated that AI investments are redefining the entire business.
Alphabet, the parent company of Google, reported second-quarter results, with cloud revenue significantly exceeding Wall Street expectations. The company also disclosed that its cloud backlog—comprising contracted but unearned revenue—rose to $514 billion, surpassing $500 billion for the first time, further indicating that its substantial AI investments are translating into commercial returns.
For the second quarter ended June 30, Alphabet generated revenue of $119.796 billion, an increase of 24% year-over-year; on a constant-currency basis, revenue grew by 23%, marking the 12th consecutive quarter of double-digit revenue growth. Operating income rose 30% year-over-year to $40.77 billion, and operating margin improved by 2 percentage points to 34%.
Google Cloud revenue reached USD 24.768 billion, surpassing the market expectation of USD 22.42 billion and soaring 82% year-over-year—the fastest growth rate in recent years—demonstrating that AI investments are continuing to translate into commercial returns. Search advertising revenue amounted to USD 63.27 billion, slightly below the market expectation of USD 63.28 billion.
Alphabet holds stakes in several companies, including Anthropic and SpaceX. Driven by a significant increase in unrealized gains on equity securities, the company’s other income for the quarter totaled $97.98 billion, propelling net income attributable to common shareholders up 298% year-over-year to $112.107 billion.
Meanwhile, Alphabet’s capital expenditures for the second quarter amounted to $44.92 billion, exceeding the market expectation of $44.15 billion.
Sundar Pichai, Chief Executive Officer of Alphabet, stated: "Our AI investments are redefining what’s possible across every part of our business."
He noted that adoption of Gemini Enterprise continues to expand, with nearly 90% of Fortune 100 companies already using the product. The Gemini app now has 950 million monthly active users (exceeding the prior estimate of 920 million), and the Gemini model currently processes 22 billion API tokens per minute.
Following the earnings release, Alphabet's stock price experienced minor fluctuations. During the earnings call, the company raised its full-year capital expenditure guidance to between $195 billion and $205 billion, up from the previous range of $180 billion to $190 billion. After the announcement, market concerns emerged over whether such substantial capital expenditures would generate commensurate returns, causing Alphabet’s shares to drop by more than 4% at one point.
Google Cloud Emerges as the Primary Growth Engine
By segment, Google Cloud remains Alphabet’s fastest-growing business.
In the second quarter, Google Cloud revenue reached $24.768 billion, an 82% year-over-year increase, marking a further acceleration from prior periods. The company stated that growth was primarily driven by enterprise AI solutions on Google Cloud Platform (GCP), enterprise AI infrastructure, and sustained demand for core cloud services. Meanwhile, Google Cloud's operating profit surged to $8.814 billion, up significantly from $2.826 billion in the same period last year, reflecting markedly enhanced profitability.
By comparison, the traditional advertising business continued to demonstrate robust growth:
Google Search and other services generated revenue of $63.271 billion, up 17% year-over-year;
YouTube ad revenue totaled $11.055 billion, a 13% year-over-year increase;
Google's subscription, platforms, and devices segment reported revenue of $12.911 billion, up 15% year-over-year.
Overall, Google Services revenue reached $94.54 billion, an increase of 15% year-over-year.
CEO: AI investments are reshaping all of Google
Alphabet CEO Sundar Pichai stated that the company’s AI investments are redefining its entire business.
He revealed that nearly 90% of Fortune 100 companies are already using Gemini Enterprise; the Gemini models process 22 billion API tokens per minute, and the Gemini app has reached 950 million monthly active users.
Meanwhile, AI-powered features continue to drive growth in Google Search query volume, and demand for the company’s cybersecurity products remains strong. The newly launched Gemini 3.5 Flash Cyber has demonstrated exceptional cost efficiency. Additionally, during the 2026 World Cup, over 1.7 billion unique users watched related content on YouTube, further boosting platform traffic.
Pichai stated that the company's 'differentiated full-stack AI strategy' continues to generate measurable business value for consumers, enterprise customers, and partners.
Continued heavy investment in AI infrastructure
To meet growing demand for AI computing power, Alphabet further strengthened its financing activities in the second quarter.
In June, the company completed offerings of Class A shares, Class C shares, and mandatory convertible preferred stock, raising net proceeds of USD 49.6 billion to expand its AI infrastructure and global computing network. It also issued USD 20.3 billion of senior unsecured notes and established an at-the-market (ATM) equity offering program with a maximum capacity of USD 40 billion, although this program had not been activated as of the end of the second quarter.
In terms of cash flow, the company’s capital expenditures reached USD 44.924 billion in the second quarter, significantly higher than USD 22.446 billion in the same period last year, reflecting Alphabet’s continued large-scale investments in data centers, AI servers, and computing infrastructure.
Due to the substantial increase in capital expenditures, free cash flow for the quarter turned negative at USD 5.855 billion, although free cash flow over the past 12 months still amounted to USD 53.273 billion.
Overall, this earnings report indicates that Alphabet’s AI investments have begun driving rapid growth in its cloud computing business, while its core advertising segment remains steadily expansive. AI commercialization is gradually transitioning from the investment phase to a stage of tangible financial returns.
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