Alphabet Inc.

Alphabet said second-quarter 2026 consolidated revenue was $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 was $63.3 billion, up 17%; YouTube advertising revenue was $11.1 billion, up 13%; Network advertising revenue was $7.3 billion, down 1%; and Google Cloud revenue was $24.8 billion, up 82%, with operating income of $8.8 billion and margin of 35.6%. The company generated $39.1 billion of operating cash flow in Q2, ended with $242.5 billion in cash and marketable securities, and had $44.9 billion of CapEx, producing negative free cash flow of $5.9 billion in the quarter. For 2026, Alphabet raised CapEx guidance to $195 billion-$205 billion, said it expects only a relatively small portion of TPU system-sale revenue to be recognized this year with most in 2027, and guided to some near-term margin pressure from third-party capacity and higher infrastructure spending.

Sundar Pichai framed the quarter as evidence that AI is broadening Alphabet’s opportunity across Search, YouTube, Cloud, and other bets. He repeatedly said the company feels early in a secular shift, describing consumer, enterprise, and developer adoption as still in the early innings and saying he is more bullish than a year ago. He also emphasized that Alphabet is committed to staying at the frontier in models while offering products across a full price-performance spectrum, including Flash models.

Anat Ashkenazi highlighted strong financial results but focused heavily on the capital intensity of the AI buildout. She cited $119.8 billion of revenue, $40.8 billion of operating income, $39.1 billion of operating cash flow, and $44.9 billion of CapEx, noting that technical infrastructure spending was the main driver and that free cash flow was negative in the quarter. She raised 2026 CapEx guidance to $195 billion-$205 billion, said higher depreciation and data center costs will pressure the P&L, and said third-party capacity in Q3 will create modest near-term margin pressure while the company builds internal capacity.

Analysts pressed management on ROI from GenAI, the pace of Gemini model releases, capital structure, TPU commercialization, and whether Waymo should eventually sit outside Alphabet. Sundar said the company is still early in the GenAI cycle, that AI opportunities look bigger than a year ago, and that Gemini 4 is an ambitious larger base model underway; he also said model release cadence should pick up, with a monthly-like rhythm over time. Anat said funding will continue to balance operating cash flow, debt, and equity, while on TPUs she explained that cloud backlog includes TPU systems sales, revenue recognition is mostly expected in 2027, and margin pressure will rise temporarily as third-party capacity is used. On Waymo, Sundar said the focus remains on scaling inside Alphabet’s long-term structure.