Alphabet’s Q2 lifted by AI and Cloud surge

Alphabet (GOOGL) reported second-quarter 2026 revenue of $119.8 billion, a 24% increase compared with the same quarter a year earlier. The performance reflected broad-based growth across core businesses, including search, cloud services and YouTube advertising.

Google’s search business generated $63.3 billion in revenue in the quarter, up 17% year over year. YouTube advertising revenue reached about $11.06 billion, an increase of 13% from the prior year period.

Google Cloud was a key driver of the quarter, with revenue climbing 82% year over year to $24.8 billion. The company also reported a Google Cloud services backlog totaling $514 billion, underscoring the scale of contracted demand for its cloud offerings.

Management linked cloud momentum to enterprise AI adoption, positioning Google Cloud as a central beneficiary of the broader AI shift. The acceleration in cloud revenue contributed significantly to Alphabet’s (GOOGL) overall growth profile in the quarter.

Alphabet recorded roughly $98–99 billion in other income in the quarter, largely driven by a $99.03 billion gain on equity securities, both realized and unrealized. This substantial investment gain helped push net income to about $112.11 billion for the period.

The outsized contribution from gains on equity securities made investment results a major component of quarterly profitability. This dynamic added a financial tailwind on top of the underlying operating growth in advertising and cloud.

Capital expenditures reached $44.9 billion in the second quarter, representing a 100% year-over-year increase. The company described this elevated spending as closely tied to AI infrastructure, including data centers and related capacity.

The quarter was viewed as a significant test of Alphabet’s strategy of heavy AI-related capital outlays. Investors monitored both the scale of capex and the relationship between that spending and revenue growth in cloud and other AI-driven products.

Alphabet emphasized that AI investments are central across its operations, with CEO Sundar Pichai stating that these efforts are redefining what is possible in every part of the business. The company highlighted particularly strong engagement with its Gemini models and applications.

Management reported about 950 million active users for the Gemini App and said Gemini models can process roughly 22 billion API tokens per minute. These metrics were presented as evidence of both user adoption and technical scale for Alphabet’s AI platform.