GOOGL // Q2 2026 EARNINGS
THEVALUETRADER RESEARCH
EARNINGS DASHBOARD — JUL 22, 2026
REF: GOOGL-Q2-2026-EARNINGS
Alphabet — Q2 2026 Earnings
Cloud accelerates to 82% growth and revenue reaches $119.8B, but a large investment gain makes reported EPS hard to compare
Headline
Revenue of $119.8B (+24%) beat expectations across the business, while Google Cloud's 82% growth offers strong evidence that AI spending is converting into demand.
TOTAL REVENUE$119.8B vs $117.1B est., +24% YoY
GOOGLE CLOUD REVENUE$24.8B, +82% YoY
CLOUD BACKLOG (RPO)$514B
REPORTED EPS$9.11, including about $98B in investment gains
Q2 CAPEX$44.9B, +100% YoY
FY2026 CAPEX GUIDANCE$195B – $205B, raised from $180B – $190B
Cleared the Bar
Beats
- Total revenue of $119.8B versus $117.1B consensus was a clean, broad-based beat, up 24% year over year
- Google Cloud revenue of $24.8B grew 82% year over year, a sharp acceleration from Q1's already-strong 63%
- Cloud backlog (RPO) reached $514B, showing that forward demand continued to build
- Advertising revenue across Search, YouTube, and Network totaled $81.63B
- Q2 capex was $44.9B. The company subsequently raised its full-year spending outlook.
Read With Caution
The EPS Asterisk
- Reported EPS of $9.11 is not comparable with the roughly $2.88 consensus because Alphabet did not disclose a comparable adjusted EPS
- The bulk of the EPS figure reflects about $98B in investment gains, primarily tied to equity investments such as SpaceX, rather than operating performance
- Q1 also included a significant investment gain, so quarter-to-quarter EPS comparisons require caution
- Capex grew 100% year over year in Q2. The absolute dollar amount is still rising rapidly.
- FY2026 capex guidance increased to $195B–$205B, and 2027 spending is still expected to rise further
φ 02Income Statement Snapshot
TOTAL REVENUE (Q2 2026 vs Q2 2025)$119.8B vs $96.4B, +24%
SEARCH & OTHER REVENUE$63.3B, +17% YoY
GOOGLE CLOUD REVENUE$24.8B vs $13.6B, +82%
ADVERTISING REVENUE (TOTAL)$81.63B vs $81.12B est.
CLOUD BACKLOG (RPO)$514B — up from $462B in Q1
CAPITAL EXPENDITURES (Q2)$44.9B, +100% YoY
GEMINI APP ACTIVE USERS950 million
API TOKEN THROUGHPUT22B/minute — up from 16B in Q1
For reference, Q1 2026 revenue was $109.9B (+22%), Google Cloud revenue was $20.0B (+63%), Cloud backlog was $462B, and capex was $35.7B. Q2's 82% Cloud growth and $514B backlog show that the momentum accelerated.
Google Cloud — The Standout
- Cloud revenue growth accelerated to 82% YoY from 63% in Q1, one of the sharpest sequential accelerations among the large cloud providers
- Backlog (RPO) reached $514B, up from $462B last quarter. Management expects more than half to convert to revenue within 24 months.
- The $32B Wiz acquisition (cloud security) has now been integrated into Google Cloud, adding an enterprise security layer versus AWS and Azure
- Gemini Enterprise and enterprise AI infrastructure remain the primary growth drivers cited by management for the segment
Search & AI Consumer Products
- Search & other revenue grew 17% to $63.3B. Growth slowed from Q1's 19% pace but remained robust at this scale.
- Gemini App now has 950 million monthly active users, while Gemini models process 22 billion API tokens per minute
- CEO Pichai: "Our AI investments are redefining what's possible across every part of our business"
Capital Intensity
- Q2 capital expenditures were $44.9B, up 100% year over year
- FY2026 capex guidance increased to $195B–$205B from $180B–$190B after the Q1 results
- CFO Anat Ashkenazi has previously flagged that 2027 capex will "significantly increase" further from the 2026 range
Sundar Pichai — CEO, Alphabet & Google
"Q2 was an amazing quarter, with Alphabet revenues growing 24% year over year and Google Cloud revenues accelerating to 82% growth, driven by demand for AI infrastructure and AI solutions. Our AI investments are redefining what's possible across every part of our business."
Bull Case
Positives
- Google Cloud's acceleration from 63% to 82% growth shows that demand for AI infrastructure and solutions is translating into recognized revenue
- A $514B backlog, up from $462B, expands forward revenue visibility as well as current revenue
- Search held up at 17% growth despite AI-disruption fears, while Gemini usage shows broad consumer engagement
- Revenue and Cloud growth offer a clearer operating payoff from AI investment than in prior quarters
- The Wiz integration into Google Cloud strengthens the enterprise security positioning that has been a competitive gap versus AWS and Azure
Bear Case
Concerns
- The $9.11 headline EPS is dominated by about $98B in investment gains, so it does not describe operating performance on its own
- Alphabet did not report a comparable adjusted EPS, limiting a clean comparison of underlying earnings with consensus
- FY2026 capex guidance increased to $195B–$205B, and 2027 spending is still expected to rise further. The capital intensity of growth is increasing.
- Search growth slowed to 17% from 19% in Q1, a modest deceleration in Alphabet's largest and most profitable segment
- Backlog conversion timing remains an execution question. A $514B RPO represents future contracted revenue, not current cash flow.
φ 06Capital Expenditure & Guidance
Q2 2026 CAPEX (ACTUAL)$44.9B, +100% YoY
Q1 2026 CAPEX (FOR REFERENCE)$35.7B
FY2026 CAPEX GUIDANCE$195B – $205B (raised from $180B – $190B)
2027 CAPEX DIRECTIONExpected to increase further, per CFO Ashkenazi
CLOUD BACKLOG CONVERSION>50% within 24 months, per management
- Alphabet reported alongside Tesla during a closely watched earnings week, putting focus on the returns from AI infrastructure spending
- The initial market reaction was positive, with Alphabet shares rising after the release
- Investors will focus on the durability of Cloud growth, the path for Search, and the higher $195B–$205B capex plan
φ 08TVT Verdict — Quick Reference
Alphabet delivered an exceptionally strong operating quarter. Google Cloud growth accelerated to 82%, backlog expanded to $514B, and Search continued to grow despite AI-disruption concerns. Those results provide tangible evidence that AI investment is creating demand. The reported EPS of $9.11 needs context, however: it includes about $98B in investment gains, and Alphabet did not disclose a directly comparable adjusted EPS. Investors should therefore judge the quarter primarily on revenue, Cloud growth, operating income, and the higher spending plan. The new $195B–$205B capex outlook reinforces both sides of the story: demand appears strong, but capital intensity is increasing rather than easing.
Google Cloud
$24.8B (+82%)
Reported EPS
$9.11 (incl. investment gain)
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