Alphabet Inc. (GOOGL) Earnings

metirFinance

Sep 2026upcoming

Next quarter

Expected to report Oct 28, 2026 — estimated from last year’s reporting date.

Consensus is $2.93 EPS for Sep 2026 across 14 estimates, ranging $2.64 to $3.12.

GOOGL Jun 2026

Reported Jul 22, 2026

: 216.32%
: -7.13%

: $2.88
: $9.11
: —
: $119.80B

Reported results

: $119.80B; from $96.43B
: 61.65%; from 59.51%
: $40.77B; from $31.27B
: 34.03%; from 32.43%
: $112.19B; from $28.20B
: $9.11; from $2.31

Highlights

Revenue: Q2 revenue rose 24% year over year to $119.8 billion, or 23% in constant currency, and increased 9% from $109.9 billion in Q1.
Google Cloud: Revenue accelerated 82% year over year to $24.8 billion, while operating income rose to $8.8 billion from $2.8 billion; Cloud backlog reached $513.9 billion within total Alphabet backlog of $519.5 billion.
Google Services: Revenue increased 15% to $94.5 billion, led by Search and other revenue up 17% to $63.3 billion, YouTube ads up 13% to $11.1 billion, and subscriptions, platforms, and devices up 15% to $12.9 billion.
Operating performance: Operating income rose 30% year over year to $40.8 billion, and operating margin expanded to 34% from 32%, despite operating expenses increasing 27% to $33.1 billion.
Reported EPS: Diluted EPS was $9.11 versus consensus of $2.88, a 216.32% surprise, but the result included $77.1 billion of after-tax gains from equity securities.
Investment gains: Other income was $98.0 billion, including a $99.0 billion net gain on equity securities, primarily from SpaceX and a private company; the gain increased EPS by $6.26.
AI infrastructure: Capital expenditures were $44.9 billion in the quarter and $80.6 billion in the first half, driving quarterly free cash flow to negative $5.9 billion; property and equipment rose to $321.2 billion from $246.6 billion at year-end.
Capital raising: Alphabet raised $49.6 billion through common and mandatory convertible preferred stock and issued $20.3 billion of senior notes to fund general purposes including AI infrastructure; it made no common-stock repurchases in Q2.
Legal and dilution: Alphabet accrued $2.1 billion for the PriceRunner judgment and had $17.4 billion of accrued legal and regulatory fines and settlements at quarter-end, while 19 million preferred shares can convert into common stock by 2029.

Analysis

Alphabet's Q2 was a strong operating quarter wrapped in an unusually large investment gain. Revenue of $119.8 billion exceeded the supplied consensus EPS benchmark by a wide margin, with diluted EPS of $9.11 versus $2.88 expected, but $77.1 billion of the net income available to common stockholders came from after-tax equity-security gains. Excluding that volatility in interpretation, the core print was defined by 24% revenue growth, 30% operating-income growth to $40.8 billion, and a two-point margin expansion to 34%. Compared with Q1, revenue increased 9% from $109.9 billion, operating income rose 3% from $39.7 billion, and EPS increased from $5.11, while year-over-year EPS rose from $2.31.

The central business development was the acceleration of Google Cloud, where revenue grew 82% to $24.8 billion and operating income more than tripled to $8.8 billion. Google Services remained healthy, with revenue up 15% and Search revenue up 17%. Alphabet is funding that AI expansion aggressively: Q2 capex reached $44.9 billion, quarterly free cash flow was negative $5.9 billion, and the company raised $49.6 billion of equity and $20.3 billion of debt. The quarter also carried higher legal exposure, including a $2.1 billion PriceRunner charge.

Core financial results

Alphabet delivered broad-based operating growth, with the reported bottom line heavily amplified by investment revaluations.

Revenue and profit: Revenue increased 24% year over year to $119.8 billion, while operating income rose 30% to $40.8 billion. Operating margin improved to 34% from 32% a year ago.
Sequential comparison: Revenue rose 9% from $109.9 billion in Q1, and operating income increased from $39.7 billion. Diluted EPS rose from $5.11 to $9.11.
Net income quality: Net income available to common stockholders increased to $112.1 billion from $28.2 billion a year ago. The increase included $99.0 billion of pre-tax equity-security gains, which contributed $77.1 billion after tax and $6.26 to diluted EPS.
Cost profile: Cost of revenues increased 18% to $45.9 billion, while operating expenses rose 27% to $33.1 billion. Research and development expense increased 32% to $18.2 billion, reflecting higher compensation and depreciation.

Google Cloud acceleration

Cloud was the quarter's most important operating growth engine. Revenue growth accelerated to 82%, supported by demand for AI infrastructure, enterprise AI solutions, core GCP services, and TPU systems. The business also provided a much larger forward revenue base, although delivery depends on customer utilization and Alphabet's ability to build capacity.

Revenue: Google Cloud revenue increased to $24.8 billion from $13.6 billion a year ago and from $20.0 billion in Q1.
Profitability: Operating income increased to $8.8 billion from $2.8 billion a year ago, implying a margin of roughly 36%, versus roughly 21% in Q2 2025.
Backlog: Total remaining performance obligations were $519.5 billion at June 30, including $513.9 billion related to Google Cloud. Alphabet expects to recognize just over 50% of the backlog over the next 24 months.
TPU revenue: Alphabet began recognizing revenue from agreements to supply TPU systems in Q2, with the significant majority of that revenue expected in 2027.

Search and services

The established Google Services franchise continued to grow while showing a clear mix advantage toward Search and away from the Network business.

Services revenue: Google Services revenue increased 15% to $94.5 billion, and operating income increased to $39.5 billion from $33.1 billion.
Search monetization: Search and other revenue rose 17% to $63.3 billion, supported by 13% growth in paid clicks and 3% growth in cost per click.
YouTube and subscriptions: YouTube ads increased 13% to $11.1 billion, while subscriptions, platforms, and devices increased 15% to $12.9 billion, primarily reflecting paid-subscription growth across YouTube services and Google One.
Network pressure: Google Network revenue declined slightly to $7.3 billion from $7.4 billion, as lower AdSense revenue more than offset growth in AdMob.
TAC: Traffic acquisition costs rose 10% to $16.2 billion, but the TAC rate declined to 19.8% from 20.6% as revenue shifted toward Search and away from Network properties.

AI investment and funding

Alphabet is converting AI demand into a substantially more capital-intensive operating model. The company is expanding technical infrastructure, taking on longer-term commitments, and using both debt and equity to fund capacity.

Capital expenditure: Q2 capex was $44.9 billion, up from $22.4 billion a year ago. First-half capex reached $80.6 billion versus $39.6 billion in the prior-year period.
Cash generation: Operating cash flow was $39.1 billion, leaving free cash flow of negative $5.9 billion after capex. Trailing-twelve-month free cash flow was $53.3 billion.
Balance-sheet build: Property and equipment increased to $321.2 billion at June 30 from $246.6 billion at December 31, 2025, while technical infrastructure assets rose to $247.2 billion from $203.7 billion.
Financing: Alphabet raised $30.5 billion through common stock and $19.1 billion through mandatory convertible preferred stock, for aggregate net equity proceeds of $49.6 billion. It also issued $20.3 billion of senior notes in Q2.
Forward obligations: The company had $85.2 billion of future payments on data-center leases not yet commenced, a $5.8 billion short-term lease beginning in Q3, and $707.0 billion of long-term supply, energy, and content commitments.

Investments and capital allocation

The quarter's earnings per share cannot be separated from Alphabet's investment portfolio and its changed capital structure. Marketable and non-marketable equity exposure increased sharply, while common-stock buybacks stopped as the company funded infrastructure and acquisitions.

Investment portfolio: Marketable equity securities were $87.1 billion at June 30, including $80.0 billion of SpaceX shares subject to short-term sale restrictions. Non-marketable securities totaled $131.5 billion, including $124.3 billion accounted for under the measurement alternative.
Acquisitions: Alphabet completed the $29.5 billion Wiz acquisition and the $5.9 billion Intersect acquisition in March. Wiz added $22.7 billion of goodwill and $8.3 billion of identifiable intangible assets.
Repurchases: Alphabet repurchased no common stock in Q2 or the first half, leaving $69.5 billion available under its $70.0 billion authorization.
Dividends and dilution: The common dividend increased 5% to $0.22 per share. The newly issued preferred stock carries a 6.25% dividend and is mandatorily convertible into common shares in 2029, subject to conversion terms and capped-call protections.

Legal and regulatory costs

Legal matters were a meaningful expense and cash-flow consideration even though they did not prevent operating-margin expansion. Alphabet also paid a previously accrued European antitrust fine after quarter-end.

PriceRunner judgment: Alphabet accrued $2.1 billion in Q2 related to the Stockholm court decision, including $1.5 billion of principal damages in general and administrative expense and $581 million of interest and costs in other income and expense.
Accrued liabilities: Short-term accrued legal and regulatory fines and settlements were $17.4 billion at June 30, primarily reflecting European Commission fines and other regulatory matters.
Android fine: Alphabet paid $5.2 billion in July 2026 for the finalized European Commission Android antitrust fine, including accrued interest.
Ongoing exposure: The company continues to face US Search and advertising-technology cases, European Digital Markets Act matters, privacy proceedings, and other claims for which potential losses may be difficult to estimate.

Alphabet Inc.

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