The news
Alphabet Q2 earnings, reported on July 22, 2026, showed revenue up 24% from a year earlier to $119.8 billion, while Google Cloud revenue rose 82% to $24.8 billion on demand for enterprise AI services and infrastructure, the company said.
Alphabet (GOOGL) said revenue grew 23% in constant currency, which strips out exchange-rate swings, and called it its 12th straight quarter of double-digit growth. Google Services revenue rose 15% to $94.5 billion. Within it, Google Search & other grew 17% to $63.3 billion, subscriptions, platforms and devices grew 15% to $12.9 billion, and YouTube ads rose 13% to $11.1 billion.
Google Cloud drove the quarter. Alphabet said growth came from Google Cloud Platform across enterprise AI Solutions and enterprise AI Infrastructure, as well as core services. Cloud operating income rose to $8.8 billion from $2.8 billion a year earlier. Consolidated operating income increased 30% to $40.8 billion, and the operating margin widened by 2 percentage points to 34%.
Investment gains drove the jump in profit. Other income included a net gain of $98.0 billion, which Alphabet said came primarily from unrealized gains on equity securities. Net income available to common stockholders rose 298% to $112.1 billion, and diluted earnings per share (EPS) rose 294% to $9.11. According to the release, the equity gain alone added $6.26 to diluted EPS.
Spending rose too. Capital expenditures were $44.9 billion in the quarter, compared with $39.1 billion of operating cash flow, leaving free cash flow of negative $5.9 billion by Alphabet's own non-GAAP measure. In June, Alphabet raised $49.6 billion in net proceeds from common and mandatory convertible preferred stock, partly to fund AI infrastructure, and issued $20.3 billion of senior notes during the quarter.
"Our AI investments are redefining what's possible across every part of our business," Sundar Pichai, CEO of Google and Alphabet, said in the release. He said nearly 90% of the Fortune 100 use Gemini Enterprise and that the Gemini app has 950 million monthly active users. On the earnings call, management raised the 2026 capital expenditure forecast to $195 billion to $205 billion from $180 billion to $190 billion, Investing.com reported. Shares fell 3.65% to $329.43 in after-hours trading on July 22, according to the same report.
The numbers
- Q2 revenue
- $119.8B (+24%)
- Google Cloud revenue
- $24.8B (+82%)
- Google Cloud operating income
- $8.8B (vs. $2.8B)
- Diluted EPS
- $9.11 (+294%)
- Net gain in other income
- $98.0B
- Q2 capital expenditures
- $44.9B
- 2026 capex forecast (reported)
- $195B-$205B
Why CEOs should care
For technology buyers, the Cloud numbers show how much enterprise AI demand is flowing to Google, and how much capacity Alphabet is building to serve it. If you are negotiating a multi-year Google Cloud or Gemini Enterprise commitment, ask for capacity guarantees in writing, and ask which AI chips and regions your workloads will run on. Alphabet's 10-Q also says it began recognizing revenue from selling TPU systems, its in-house AI chips, in the quarter, so large buyers can now ask about buying hardware as well as renting it.
For CFOs and investors, read the headline EPS with care. By Alphabet's own disclosure, $6.26 of the $9.11 came from the gain on equity securities, and the company warned that such swings could make other income volatile. The operating story is still strong, but the quarter's capital spending exceeded operating cash flow, and Alphabet raised new equity and debt, naming AI infrastructure among the uses for the stock proceeds.
For boards, Alphabet is a benchmark for what AI spending at scale looks like: a forecast of up to $205 billion in 2026 capital expenditures, paired with Cloud growth that sped up. Directors should ask their own management teams which AI investments have measurable revenue or cost results attached, and on what timeline.
The bigger picture
The results show the AI trade-off facing the largest cloud providers: faster revenue growth in exchange for capital spending that can outrun cash generation. Alphabet's quarter combined 82% Cloud growth with capital outlays above operating cash flow and new outside financing through stock, preferred stock and notes. Google Cloud's results also now include Wiz, the cloud-security company Alphabet bought for $29.5 billion in a deal completed on March 11, 2026, according to its 10-Q.
What happened next
In its quarterly report filed with the SEC on July 23, 2026, Alphabet disclosed a revenue backlog of $519.5 billion as of June 30, of which $513.9 billion related to Google Cloud, and said it expects to recognize just over half within 24 months. The filing said the $99.0 billion gain on equity securities related primarily to unrealized gains on its SpaceX stake and a stake in an unnamed private company.
The Motley Fool wrote on August 11 that the stock slid roughly 7% following the higher spending forecast. Watch the third-quarter report for whether Cloud growth holds near this pace, how quickly the backlog converts to revenue, and whether Alphabet taps its $40 billion at-the-market stock program.
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