Alphabet (GOOGL) is set to report second-quarter earnings after the market closes today, with analysts projecting $116.8 billion in revenue and $2.89 earnings per share. The market's primary focus is whether the company's massive artificial intelligence investments are beginning to generate sustainable profits. Investors will scrutinize Google Cloud growth, the Gemini AI timeline, and capital expenditure guidance for 2026.
The Numbers to Watch
Consensus estimates call for revenue of roughly $116.8 billion, up about 21% year-over-year, with earnings per share around $2.89. Alphabet has beaten estimates for several consecutive quarters, raising expectations for today's report. Last quarter, Google Cloud grew 63% year-over-year, the fastest pace among major cloud providers, and its profit margin nearly doubled. However, much of the net income jump came from unrealized gains on stakes in companies like SpaceX, so investors will focus on operational performance rather than headline profit.
AI Spending and Capex
Alphabet has guided for $180 billion to $190 billion in 2026 capital spending, primarily for data centers and AI chips. This spending has tested investor patience, especially after the company raised fresh equity for the first time in decades to fund the buildout. The bull case rests on Cloud's roughly $460 billion order backlog, pointing to years of future revenue already booked. The bear case centers on slow profit conversion or further delays in the Gemini rollout, which could weigh on the stock regardless of today's headline numbers.
Other Key Factors
Search advertising remains Alphabet's largest business, and investors want reassurance that AI-generated search summaries are not eroding traditional ad revenue. Some Wall Street analysts have rotated out of Meta stock into Google, betting that Alphabet's cloud and custom AI chip business, the Tensor Processing Unit, offers a clearer path to AI profits. Alphabet recently began selling these chips to external customers, and any update on that business could reshape views on its AI strategy. The market wants proof that Alphabet's AI bet is turning into durable profit, not just bigger bills. Strong revenue alone won't be enough; management's comments on capex, Cloud backlog conversion, and the Gemini timeline could move the stock more than the quarterly numbers themselves.