Prime Highlights
- Google Cloud revenue jumps 82% to $24.8 billion, beating analyst expectations.
- Alphabet raises 2026 capex outlook by $15 billion to meet AI demand.
Key Facts
- Sundar Pichai confirms Gemini 4 training underway with strong compute investment.
- Google begins direct TPU chip revenue recognition, expanding AI hardware business.
Background
Alphabet reported its strongest-ever quarter for cloud computing growth, prompting the company to raise its 2026 capital spending plans by 15 billion dollars to meet surging demand for AI infrastructure.
Chief Financial Officer Anat Ashkenazi told analysts the company now expects to invest between 195 billion and 205 billion dollars this year, up from its earlier forecast of 180 billion to 190 billion dollars.
Google Cloud revenue climbed 82 percent to 24.8 billion dollars for the quarter ended June, comfortably outpacing analyst expectations of a 64 percent rise, as enterprises worldwide moved quickly to adopt AI tools.
Total company revenue reached 119.8 billion dollars, ahead of the 116.9 billion dollar consensus estimate, while advertising revenue came in strong at 81.6 billion dollars.
Ashkenazi said Google has expanded capacity significantly over the past three years and continues investing to keep pace with strong customer demand, noting that faster delivery of new capacity supported the higher spending plan.
The company also began recognizing revenue from direct sales of its TPU chips for the first time this quarter, opening a promising new growth avenue as it competes in the AI chip market.
CEO Sundar Pichai told analysts Google remains at the frontier across many AI capabilities and is investing heavily in coding and agentic AI development. He said Google has already begun training its next-generation Gemini 4 model, directing substantial compute resources toward it, and expressed strong confidence in Google’s position at the leading edge of AI going forward.
Google continues building major partnerships, including with Anthropic, as companies race to secure cloud capacity for AI development.
Alphabet shares remain among the strongest performers in the Magnificent Seven group this year, up more than 9 percent to date.