Alphabet's Financial Results for Q2 2026

Alphabet, the parent company of Google, has reported its financial results for the second quarter of fiscal year 2026, covering the period from April to June. Consolidated revenues reached $119.8 billion, representing a 24% increase from $96.4 billion in the same quarter of 2025 (+23% at constant currency), marking the twelfth consecutive quarter of double-digit growth. Compared to Q1 2026, when revenues were approximately $109.9 billion, the sequential increase was 9%.

The company was particularly driven by the cloud segment: Google Cloud generated $24.8 billion, with an 82% year-over-year growth, the most robust pace among all business divisions. The company attributed this acceleration to rising demand for AI solutions and infrastructure for businesses, as well as traditional cloud services. The operating margin of this segment rose from 20.7% to 35.6%, with an operating profit of $8.8 billion compared to $2.8 billion the previous year.

Google Services, which includes advertising, Android, Chrome, Maps, Play Store, and YouTube, also showed robust growth, with revenues of $94.5 billion (+15%). Within this segment, the Search & Other category rose 17% to $63.3 billion, YouTube advertising revenues grew 13% to $11.06 billion, while the category encompassing subscriptions, hardware devices, and other non-advertising revenues from YouTube totaled $12.9 billion (+15%).

In contrast, revenues from the Google Network slightly declined, falling 1% to $7.3 billion. The Other Bets segment, which includes the company's diversification activities like autonomous transportation, generated $382 million but recorded an operating loss of $1.8 billion, worsening from the $1.246 billion loss in the same period of 2025.

Regarding overall profitability, Alphabet's operating profit rose to $40.77 billion (+30%), with an operating margin of 34%, an increase of two percentage points. The most notable figure is the net profit available to common shareholders, which soared from $28.2 billion to $112.1 billion, marking a 298% increase; diluted earnings per share jumped from $2.31 to $9.11 (+294%).

This surge is largely attributed to a non-operating item: net other income reached nearly $98 billion, compared to $2.7 billion the previous year, mainly due to unrealized gains on stock holdings held by the company. Alphabet indeed holds stakes in several AI-related companies, including Anthropic and SpaceX; the latter went public last June, creating significant gains for shareholders, although its stock value reportedly has already dropped from debut levels, an evolution occurring after the end of the accounting quarter on June 30th. Specifically, the combined effect of gains on stock holdings contributed approximately $77 billion to the quarterly net profit, accounting for over two-thirds of the total.

As revenues grew, Alphabet continued to increase investments in infrastructure: capital expenditures (capex) for the quarter rose to $44.9 billion, double that of the same period in 2025, continuing a growth trend that has persisted for several consecutive quarters. This level of investment impacted free cash flow, resulting in a negative $5.9 billion for the quarter, although the figure calculated over the previous twelve months remains positive at $53.3 billion, down 20% year-over-year.

During the analyst conference call, CEO Sundar Pichai linked the growth in advertising revenues related to search, amounting to 17%, to the rollout of AI-based features like AI Overviews and AI Mode. The latter tool reportedly surpassed 1 billion active monthly users globally since its widespread launch last October. Pichai also asserted that AI functions in search allow Google to direct billions of clicks to websites each week, associating the rise in search volumes with highly publicized events, such as the recently concluded FIFA World Cup 2026: according to the company, over 1.7 billion unique viewers followed content related to the event on YouTube.

On the generative AI product front, Alphabet announced that the Gemini family models now process about 22 billion tokens via APIs every minute, while the Gemini app reached 950 million active monthly users. The company also stated that the Gemini Enterprise platform is used by about 90% of the companies listed in the Fortune 100.

Despite exceeding analysts' and investors' expectations, who have long questioned the ability of large tech companies to convert substantial investments made in developing AI into actual profits, Alphabet's stock closed the trading day down 1.24%.