Alphabet Inc.

Alphabet said 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 increased 15% to $94.5 billion and Google Cloud revenue rose 82% to $24.8 billion, with Cloud operating margin expanding to 35.6%. Net income and EPS increased significantly, helped by $98 billion in other income and expenses from unrealized gains in the equity securities portfolio. For 2026, Alphabet raised full-year CapEx guidance to $195 billion-$205 billion from $180 billion-$190 billion, expects a slight FX headwind in Q3, and said TPU system revenue will mostly be recognized in 2027 rather than this year.

Sundar Pichai framed the quarter as evidence that Alphabet is in the “early innings” of a secular shift driven by AI across consumer, developer, and enterprise products. He emphasized Search, Gemini, YouTube, and Cloud as the main momentum drivers, repeatedly stressing that the company is supply constrained because demand is so strong. His tone was upbeat and confident, especially around Gemini 4, where he said the team is being “very ambitious” and that Alphabet is becoming more bullish on the opportunities ahead.

Anat Ashkenazi highlighted broad-based financial strength, including 24% revenue growth, 30% operating income growth to $40.8 billion, and strong operating cash flow of $39.1 billion in the quarter and $185.7 billion over the trailing 12 months. She noted CapEx of $44.9 billion in Q2, negative free cash flow of $5.9 billion, and cash and marketable securities of $242.5 billion, including $87.1 billion of marketable equity securities, against $98.2 billion of long-term debt. She said higher technical infrastructure spending will continue to pressure depreciation and data center operating costs, and that using third-party capacity in Q3 will create modest near-term margin pressure while the company builds internal capacity.

Analysts pressed management on the ROI of GenAI, the pace at which Gemini can remain frontier-leading, capital structure, TPU monetization, and whether compute constraints are broad-based or concentrated. Pichai said Alphabet is still in the early stages of the AI opportunity and that the company has become more bullish over the past year, while Ashkenazi said capital allocation will continue to balance operating cash flow, debt, and equity to maintain a resilient balance sheet. On TPUs, management said the priority remains frontier model development and serving core consumer and enterprise products, with TPU system sales expanding the addressable market but creating some near-term margin pressure as third-party capacity is used to bridge supply gaps.