Revenue from Google's cloud business jumped 82%. The growth rate once again surprised the market.

Google Cloud reported an 82% increase in revenue for the second quarter, significantly exceeding Wall Street’s expectations. At the same time, capital expenditures doubled due to spending on AI, and the company pledged to increase them to $200 billion by the end of the year—more than the market had anticipated.

Bloomberg notes that the earnings forecast overshadowed the company's otherwise strong results: shares fell more than 3% in after-hours trading following the release of the earnings report.

The fourfold increase in net income came as a surprise to investors. Alphabet did not disclose the reason behind this, but it is likely that the company revalued its holdings in SpaceX and Anthropic.

Alphabet has once again raised its already extremely high forecast for capital expenditures in 2026, according to Bloomberg. The company now expects these expenses to reach between $195 billion and $205 billion. The previous estimate was no higher than $190 billion, while analysts had projected the tech giant’s spending at $186 billion, the agency notes.

“This latest upward revision to the capital expenditure forecast doesn’t bode well for Alphabet,” Bloomberg quotes Thomas Monteiro, a senior analyst at Investing.com, as saying. “Add to that an environment of rising [Fed] interest rates and a persistent shortage of AI infrastructure—and the notion that the company can finance itself indefinitely through cash flow may start to lose traction.”

During a conference call with investors and analysts, Alphabet CFO Anat Ashkenazi stated that capital expenditures in 2027 will be “significantly” higher, as the company builds data centers and acquires other computing resources for its AI projects, according to Bloomberg.

In the quarter under review, Alphabet's CapEx doubled compared with the same period last year, totaling $44.9 billion, slightly exceeding StreetAccount analysts' estimates.

Alphabet shares fluctuated around the zero mark in after-hours trading following the release of its earnings report, but plummeted more than 3.5% after news of increased capital expenditures.

Alphabet's revenue in the second quarter rose 24% compared with the same period last year, reaching $119.8 billion. Analysts surveyed by LSEG had expected $116.9 billion, according to CNBC.

At the same time, Google Cloud’s revenue soared by 82%, reaching $24.8 billion and significantly outperforming Wall Street estimates: the consensus forecast had predicted growth of only 64%, the TV channel reports. By comparison, in the previous quarter, Google’s cloud business generated over $20 billion for the first time, growing by 63%. The growth rate in this segment continues to accelerate, outpacing that of its competitors—Microsoft and Amazon Web Services, according to CNBC.

“Given what we now know, [Alphabet] shares should rise tomorrow,” wrote Gene Munster, co-founder and managing partner of Deepwater Asset Management, on the social media platform X ahead of the conference call. “The Cloud metric is the most important one, and it came in significantly better than expected.”

Revenue from the search division increased by 17% year-over-year to $63.3 billion. The World Cup generated a record number of search queries for Google, according to Alphabet CEO Sundar Pichai. He also noted that during the tournament, videos about the World Cup on YouTube were viewed by 1.7 billion unique viewers worldwide. “As a huge soccer fan, I was especially pleased to see that search usage reached an all-time high during the World Cup,” CNBC quoted Pichai as saying. “This really shows how often people turn to Google during important moments.”

The tech giant’s net income rose by nearly 300% to 112.1 billion. This figure was significantly influenced by so-called “other income”: the company reported receiving approximately $98 billion in paper gains related to its stakes in other companies. The Financial Times reports that among these investments is a stake in SpaceX. Alphabet did not disclose exactly how much of this amount came from shares in Elon Musk’s space company, but the revaluation could have been significant: according to the Silicon Valley Business Journal, Alphabet owns more than 6% of SpaceX, and the company’s June IPO valued it at nearly $1.8 trillion. Alphabet may also have accounted for a change in the value of its stake in the AI startup Anthropic, notes CNBC.

This article was AI-translated and verified by a human editor