Alphabet Inc.

Alphabet reported second-quarter 2026 consolidated revenues of $119.8 billion, up 24% year over year, or 23% in constant currency. Operating income rose 30% to $40.8 billion, and operating margin was 34%. Google Services revenue was $94.5 billion, up 15%; Search and other advertising revenue rose 17% to $63.3 billion; YouTube advertising revenue increased 13% to $11.1 billion; Network advertising revenue was $7.3 billion, down 1%; and Google Cloud revenue jumped 82% to $24.8 billion, with Cloud operating income of $8.8 billion and operating margin of 35.6%. Net income and EPS increased significantly, helped by unrealized gains in OI&E, but no EPS figure was stated in the transcript. Looking ahead, management expects a slight FX headwind to Q3 revenue, said Cloud growth should remain strong, and raised full-year 2026 CapEx guidance to $195 billion-$205 billion; they also said most revenues from TPU system sales agreements will be realized in 2027.

Sundar Pichai struck an upbeat tone, saying Alphabet has “exciting momentum” and describing AI as redefining the business across Search, YouTube, Cloud, and other bets. He emphasized that the company is still in the early innings of a secular shift in consumer and enterprise computing, and said he is “more bullish” than a year ago on the ROIC opportunity. He also highlighted broad model adoption, rapid product launches, and continued progress toward Gemini 4 and agentic capabilities.

Anat Ashkenazi said the quarter delivered the 12th consecutive quarter of double-digit revenue growth, with operating cash flow of $39.1 billion and trailing-12-month operating cash flow of $185.7 billion. CapEx was $44.9 billion in Q2, free cash flow was negative $5.9 billion for the quarter, and trailing-12-month free cash flow was $53.3 billion; she also noted cash and marketable securities of $242.5 billion and long-term debt of $98.2 billion. She raised full-year 2026 CapEx guidance to $195 billion-$205 billion, said third-party capacity in Q3 will create modest near-term margin pressure, and reiterated that the company is prioritizing a healthy balance sheet while funding growth through operating cash flow, debt, and limited equity.

Analysts focused heavily on ROIC, CapEx, model leadership, TPU strategy, capital structure, and Waymo. Management said it is still in the “very early” stage of the AI opportunity, that demand is strong enough to justify continued investment, and that the company is increasingly bullish on the opportunity compared with a year ago. On capital structure, Anat said Alphabet is using operating cash flow first, then debt, and only limited equity, while on TPUs Sundar said allocation will prioritize frontier model development and core consumer and enterprise serving before external demand. On Waymo, Sundar said Alphabet remains focused on scaling the business inside the company rather than changing the structure.