Google Cloud reported an 82% year-over-year revenue surge to $24.8 billion in Q2, driven by strong demand for AI-driven cloud services. The growth outpaced analyst expectations of 64% and followed a 63% increase in the previous quarter. Alphabet raised its 2026 capital expenditure (capex) forecast to $195 billion–$205 billion, up from $180 billion–$190 billion, citing accelerated AI infrastructure investments. The company spent $44.9 billion in Q2, with most funding AI-related projects.
Google Cloud CEO Thomas Kurian said existing customers are spending 50% more than committed, attributing the growth to product differentiation and execution. The company plans to lease third-party cloud capacity to meet demand, even if it temporarily reduces margins. Meanwhile, Alphabet’s net profit quadrupled to $112 billion, boosted by AI investments in SpaceX and Anthropic, which contributed $99 billion in gains.
CEO Sundar Pichai defended Google’s AI strategy amid concerns over delays in releasing Gemini 3.5 Pro, a flagship model. He emphasized Gemini Flash, a faster, cheaper model, as a key driver for applications like cybersecurity and enterprise software. Pichai acknowledged gaps in AI coding but highlighted improvements in Gemini 3.6 Flash, which gained 10 points on a coding benchmark.
Investor reaction was mixed: Alphabet shares initially dipped over 7% after the capex announcement but later stabilized. Analysts noted that while Google Cloud is benefiting from AI demand, the company’s own AI efforts face competition from OpenAI, Anthropic, and Chinese rivals.