For the second quarter, Alphabet reported revenue of $119.8 billion, higher than the $116.93 billion estimated. However, its Earnings per Share (EPS) at $2.85 was lower than the street expectations of $2.89.
The stock though, declined after the company boosted its capex guidance for the year further, past $200 billion. Alphabet now expects to spend between $195 billion to $205 billion in 2026, higher than the $180 billion to $190 billion it had projected in the previous quarter.
CFO Anat Ashkenazi said during the earnings call that they continue to remain in a “supply-constrained environment.” He added that there is very strong demand from both external cloud customers and from across various business segments.
Revenue growth for the quarter was driven by the outperformance of Google Cloud, whose revenue grew by 82% from the year-ago period. Cloud revenue of $24.77 billion easily surpassed analysts expectations of $22.46 billion. Cloud backlog also grew to $514 billion from $460 billion in the previous quarter.
Amidst the increasing AI competition, Google said that its Gemini App now has 950 million monthly active users, and can process 22 billion tokens per month. There have been reports of the company delaying the launch of its Gemini 3.5 Pro model, to which CEO Sundar Pichai said that the model is undergoing testing and they are already investing compute into Gemini 4 to compete with Anthropic and OpenAI.
“Gemini is now within a whisker of becoming Google’s third different one billion-user consumer AI product, alongside AI Overviews and AI Mode,” Emarketer principal analyst Nate Elliott said. “On the enterprise side, AI demand is driving enormous growth in the cloud business.”
Alphabet’s net income also surged courtesy of the gains from its investments made in Anthropic and SpaceX. The other income component itself contributed nearly $100 billion to its net income during the quarter.
YouTube revenue for the quarter stood at $11.1 billion, better than expectations. The unit is expanding its reach across connected TVs, creator-led programming and new AI-powered tools for viewers and creators.
Shares of Alphabet are down 3.3% in extended trading at $330.7. The stock had dropped 1.2% in regular trade and is up 8.5% so far this year.
(With Inputs From Agencies)
