Alphabet delivered a strong second-quarter earnings report. The company's revenue increased by 24% year-over-year to $119.8 billion. Amidst the accelerated deployment of AI by enterprises, Google Cloud once again became one of the fastest-growing businesses. Management also signaled a clearer message: Google is prepared to continue increasing investment to meet demand, even if short-term profit margins are under pressure.
Capital expenditures for 2026 will be further increased.
Google has raised its 2026 capital expenditure forecast to $195 billion to $205 billion, up from its previous guidance of up to $190 billion. The company explained that demand for AI infrastructure still exceeds existing supply, and the new investment will primarily be used to accelerate computing power deployment.
Alphabet CFO Anat Ashkenazi stated in the earnings call that this upward revision reflects the accelerating expansion of computing power. In addition to building its own infrastructure, Google will also make greater use of third-party cloud service providers to alleviate current supply shortages.
This approach will put some pressure on profit margins in the short term, but the company is more focused on expanding its customer base and gaining a larger share of the AI market.
Google Cloud becomes the main driver of AI growth.
Search remains Google's largest business, but this earnings report shows that cloud services are becoming the core driver of the company's AI growth. In the second quarter, Google Cloud revenue grew 82% year-over-year to $24.8 billion, significantly exceeding market expectations.
Meanwhile, the backlog of cloud orders reached $514 billion, indicating that enterprise customers' demand for AI application development and deployment remains strong. Ashkenazi stated that the market is currently experiencing supply constraints, with external cloud customers and internal business units vying for computing resources.
- Google Cloud's revenue in the second quarter was $24.8 billion.
- The backlog of cloud business orders has reached $514 billion.
- Approximately 60% of infrastructure spending is allocated to AI servers.
Gemini's monthly active users rise to 950 million
In terms of consumer-facing AI products, Gemini is also expanding rapidly. Google stated in a conference call that the Gemini app has reached 950 million monthly active users, continuing to rise from approximately 650 million in October last year, and also exceeding the level of over 750 million earlier this year.
Alphabet CEO Sundar Pichai also stated that Gemini's daily active users have tripled in the past year. At this pace, Gemini is closing the gap with OpenAI ChatGPT, which currently has approximately 1 billion monthly active users.
In addition to expanding its user base, Google is also pushing for cost reduction in its models. This week, the company launched three new Gemini models, including Gemini 3.6 Flash. Google says this version improves programming performance while allowing tasks to be completed with fewer tokens, thereby reducing the deployment cost of AI applications.
