Alphabet’s parent company Google reported stronger-than-expected results for the second quarter on Wednesday, delivering a sign that its massive artificial intelligence spending spree is paying off so far. The company posted earnings of $112.11 billion, or $9.11 per share, in the April-June period. That represented a significant jump from $28.2 billion, or $2.31 per share, in the same quarter last year. Revenue grew 24% to $119.8 billion from $96.43 billion, exceeding Wall Street’s expectations of $117.06 billion.
The results demonstrated that Alphabet’s strategic focus on artificial intelligence is translating into solid business momentum across multiple segments. CEO Sundar Pichai said in a statement that the company’s AI investments are “redefining what’s possible across every part of our business.” The chief executive highlighted robust adoption of the company’s AI tools, noting that nearly 90% of the Fortune 100 now use Gemini Enterprise. Gemini models process 22 billion API tokens per minute, while the Gemini App reached 950 million monthly active users.
Google Cloud emerged as the standout performer for the quarter. The cloud division posted revenue of $24.8 billion, climbing 82% year-over-year and significantly outpacing analysts’ expectations of roughly 64% growth. Cloud operating income surged to $8.8 billion, more than tripling from $2.8 billion in the same period a year earlier. The growth was fueled by strong enterprise demand for AI infrastructure and enterprise AI solutions. Google Cloud’s contracted backlog reached $514 billion, underscoring the company’s significant pipeline of future revenue.
The company’s advertising business remained solid despite questions about how artificial intelligence might disrupt traditional search. Google Search and other revenue grew 17% to $63.3 billion, while YouTube advertising revenue increased 13% to $11.1 billion. Subscriptions, platforms, and devices revenue rose 15% to $12.9 billion.
Consolidated operating income increased 30% to $40.8 billion, with operating margin expanding two percentage points to 34%. However, the company’s reported net income figures were significantly boosted by investment gains. Google saw a net gain of $98 billion, mainly as a result of gains on its equity investments, primarily in Anthropic and SpaceX, which went public in June. Excluding these investment gains, the underlying operating performance remained robust, with operating income growth of 30% year-over-year.
The quarterly results extended Alphabet’s streak of strong performance. This marked the company’s 12th consecutive quarter of double-digit revenue growth and reflected accelerating momentum in Google Cloud particularly, which grew faster than cloud competitors Microsoft Azure and Amazon Web Services.
One element that drew investor scrutiny, however, was the company’s updated capital expenditure guidance. Alphabet significantly raised its expected capex spending for 2026 to between $195 billion and $205 billion, up from previous guidance of $180 billion to $190 billion. Finance chief Anat Ashkenazi told analysts that the company would continue investing heavily in AI infrastructure, stating that demand still outpaces the company’s investments. The company also signaled that 2027 capital expenditures would increase significantly from 2026 levels.
While Google Cloud’s exceptional growth helped ease some investor concerns about whether the company’s AI spending would translate into sustainable revenue growth, the guidance increase prompted mixed market reaction. Alphabet’s shares initially fell in extended trading following the earnings announcement and capex update. In the immediate aftermath, stock price movements were volatile as investors weighed the impressive revenue and cloud growth against concerns about future spending levels and their impact on profitability.
The capital expenditure figures reflect the industry-wide race to build infrastructure to meet growing demand for artificial intelligence capabilities. Alphabet is investing heavily in data centers, custom AI chips, and networking equipment to support its cloud business and AI products. The company has been aggressive in funding these investments, issuing stock and debt to strengthen its balance sheet for the expansion.
Analysts praised the underlying business execution. One analyst called the results “impressive,” noting that on the consumer side, Gemini was approaching the threshold of becoming Google’s third different product with more than one billion users. On the enterprise side, the analyst noted that AI demand is driving enormous growth in the cloud business, while strong search advertising growth demonstrates that artificial intelligence is complementary to search advertising rather than replacing it.
The quarter demonstrated that Alphabet’s expansive AI strategy is generating tangible returns through faster cloud growth and improved profitability in that segment. The company’s strong execution across its core businesses and emerging AI services positions it to continue capturing significant revenue from enterprises seeking advanced computing capabilities.