Google parent Alphabet reported its second-quarter 2026 earnings after the market close on July 22, with investors focused on whether the company can justify its record artificial intelligence spending while maintaining growth across search, cloud, and advertising. The earnings call kicked off at 4:30 p.m. ET as Wall Street awaited the results of what analysts called the first major test of the ballooning capital expenditure trade fueling the AI revolution.
Consensus estimates from LSEG put earnings per share at $2.89 and total revenue at $116.9 billion. Google’s search business was expected to hit $63.4 billion, up from $54.19 billion a year earlier, while YouTube advertising revenue was estimated to reach $10.8 billion from $9.8 billion, according to StreetAccount. The most closely watched metric, however, was Google Cloud growth.
Google Cloud was expected to deliver 64% year-over-year growth to $22.24 billion in Q2, according to StreetAccount, an acceleration from the 63% expansion in the first quarter. That pace tops market leader Amazon Web Services’ 28% growth and Microsoft Azure’s 40% increase. Bank of America raised its Cloud growth estimate to 70% for Q2, citing strong enterprise demand indicators and backlog data pointing to at least $230 billion in committed revenue over the next eight quarters. Google Cloud’s backlog reached $462 billion in Q1, nearly double the prior quarter, driven by enterprise AI solutions becoming the primary growth driver for the first time in the unit’s history.
The earnings came as Alphabet faces mounting investor scrutiny over its capital expenditure plans. In April, the company raised its 2026 capex guidance to between $180 billion and $190 billion, up from $175 billion to $185 billion, to meet surging demand for artificial intelligence infrastructure. Consensus estimates from FactSet expect Alphabet to spend $187.1 billion in capex this year, nearly double the $91.4 billion it spent in 2025. CFO Anat Ashkenazi signaled even larger spending ahead, saying in April that 2027 capex is likely to “significantly increase” from the up to $190 billion planned for this year. Bank of America estimates 2027 capex could reach $262 billion, and the consensus estimate for that year sits around $257 billion.
One complication for interpreting Q2 results: Alphabet’s stake in AI startup Anthropic generated substantial unrealized gains in the quarter. The company holds roughly 14% of Anthropic, a stake worth approximately $135 billion at Anthropic’s latest valuation of $965 billion. Anthropic’s valuation had risen from $380 billion at the end of Q1, following a $65 billion fundraising round. Bank of America estimates Alphabet’s 14% stake generated roughly $80 billion in unrealized gains, which flows through the company’s operating income for the quarter. Bank of America raised its Q2 EPS estimate to $8.38 as a result, well above the Street consensus of $2.90. Investors will need to strip out that line item to get a clean read on how the underlying business actually performed, the bank noted.
The earnings report comes as Google faces competition from OpenAI and Anthropic in frontier AI models, while also contending with cheaper open-source alternatives from China. On Tuesday, ahead of earnings, the company released three new Gemini models, including Gemini 3.5 Flash Cyber designed to detect and patch software vulnerabilities at a lower price per token than larger models. The moves reflect Google’s effort to compete across both high-end and cost-conscious segments of the AI market. Google’s stock dropped nearly 3% in July heading into the report, putting the company on pace for a third straight losing month despite being up 11% for the year.
Sources
- CNBC — Live earnings coverage, capex guidance, cloud growth forecasts, and analyst commentary
- TheStreet — Bank of America Q2 EPS estimate, Anthropic stake revaluation details, Cloud backlog and margin analysis
- FactSet — Consensus capex estimates for 2026 and 2027
