Alphabet Inc. reported its second quarter 2026 results, with executive Anat Ashkenazi stating that "Consolidated revenues were $119.8 billion" for the quarter, up 24 percent year-over-year.
Operating income was $40.8 billion and the operating margin was 34 percent for the second quarter.
Net income and earnings per share increased significantly, primarily due to 98 billion dollars in other income and expenses from unrealized gains in the company's equity securities portfolio.
Within segments, Google Services revenues reached 94.5 billion dollars, driven by Search and subscriptions, while Google Cloud revenues rose 82 percent to 24.8 billion dollars for the quarter.
The company reported a negative free cash flow of 5.9 billion dollars, impacted by 44.9 billion dollars in second-quarter capital expenditures.CEO Sundar Pichai highlighted momentum in artificial intelligence, stating that "our AI investments are redefining what's possible across every part of our business". In search, the company merged AI Overviews and AI Mode into a single experience, with AI Mode surpassing 1 billion monthly active users.
The Gemini app reached 950 million monthly active users, and more than 1.7 billion unique viewers watched World Cup-related videos on YouTube.
Google Cloud backlog expanded by over 50 billion dollars sequentially to 514 billion dollars, driven by strong enterprise demand for Gemini Enterprise, which is now used by nearly 90 percent of the Fortune 100.
Additionally, Alphabet delivered TPU systems to customer data centers for the first time in the second quarter, and Waymo introduced its newest sixth-generation driver vehicle, Ojai, to public riders.In partnerships and ecosystem developments, Target and Steve Madden went live with the open-source universal commerce protocol, while Booking Holdings expanded its multiyear cloud commitment.
For future expectations, management updated its full year 2026 capital expenditures guidance range to 195 billion to 205 billion dollars, up from the previous estimate of 180 billion to 190 billion dollars, to accelerate capacity delivery.
Executive Anat Ashkenazi stated that the company expects capital expenditures to "increase significantly in 2027" compared to 2026.
The company also anticipates a slight foreign exchange headwind to consolidated revenue in the third quarter. To bridge near-term capacity constraints, Google Cloud plans to utilize third-party capacity in the third quarter, which is expected to create modest margin pressure, alongside near-term integration headwinds from the Wiz acquisition.