Alphabet reported stronger-than-expected second-quarter results as demand for AI infrastructure and enterprise software pushed Google Cloud revenue up 82% from a year earlier. Cloud sales reached $24.8 billion, compared with $13.6 billion in the same quarter of 2025.
Alphabet’s overall revenue increased 24% to $119.8 billion, marking its 12th consecutive quarter of double-digit growth. Google Services, which includes Search, YouTube and subscriptions, generated $94.5 billion.
Enterprise AI Demand Lifts Google Cloud
Alphabet said Google Cloud’s growth was driven by companies adopting AI infrastructure and software built around Gemini. Cloud’s contracted backlog reached $514 billion, representing services that customers have agreed to purchase but that Alphabet has not yet recognised as revenue.
Nearly 90% of Fortune 100 companies now use Gemini Enterprise, according to Chief Executive Sundar Pichai’s official earnings remarks. Existing Cloud customers also exceeded their contractual commitments by more than 50%.
Google Cloud operating income rose as revenue expanded, while its operating margin reached 35.6%. Alphabet said customer acquisition more than doubled from a year earlier, and transactions through Google Cloud Marketplace increased more than sevenfold.
Gemini Reaches 950 Million Users
The Gemini app now has 950 million monthly active users, up from 750 million at the end of 2025. Daily active users tripled over the past year.
Google’s model APIs are processing about 22 billion tokens per minute, compared with 16 billion during the previous quarter. More than nine million developers use Gemini models and related developer products each month.
Pichai said AI is also contributing to growth across Search and YouTube. Search and related advertising revenue increased 17%, while YouTube advertising revenue rose 13%.
Investment Gains Boost Net Income
Alphabet reported net income of $112.1 billion, compared with $28.2 billion a year earlier. However, much of the increase came from $98 billion in other income, primarily unrealised gains on investments including its stake in SpaceX, rather than its operating businesses.
The company’s second-quarter earnings release showed earnings of $9.11 per share. Alphabet also recorded negative free cash flow of about $5.9 billion as infrastructure spending increased.
Alphabet raised its expected 2026 capital expenditure to between $195 billion and $205 billion, above its previous forecast of $180 billion to $190 billion. The spending will primarily fund data centres, servers, networking equipment and AI chips.
Pichai said strong customer demand and long-term Cloud agreements gave Alphabet confidence to continue expanding computing capacity despite investor concerns about when those investments will produce sustained returns.
Featured image credits: Wikimedia Commons
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