Latest quarter

Alphabet reported Q2 FY2026 revenue of $119.8 billion, up 24.2% from Q2 FY2025. On the basis used for the consensus comparison, the company reported $103.6 billion of revenue against the consensus of $101.3 billion, or 2.31% above consensus. Alphabet reported diluted EPS of $9.11, up 294.4% from $2.31; the reported figures provide no adjusted-EPS consensus comparison.

The filing said Google Services revenue rose by $12.0 billion and Google Cloud revenue increased by $11.1 billion, while Google Network revenue declined by $51 million. YouTube advertising revenue was $11.1 billion, and subscriptions, platforms and devices revenue was $12.9 billion. Alphabet reported gross margin of 61.6%, compared with 59.5%, and operating margin of 34.0%, compared with 32.4%. Operating cash flow was $39.1 billion, while free cash flow was −$5.9 billion, which the company attributed to capital spending. Alphabet did not state a quarterly revenue or EPS target in its current outlook against which Q2 results could be compared.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

Sundar Pichai said demand for Alphabet’s AI models and cloud offerings continued to exceed available supply. He said Google Cloud revenue grew 82%, driven by demand for AI infrastructure and AI solutions, and that the company was seeing diversified demand across products, customers, geographies and industries. Pichai said the company’s cloud strategy combines chips, models, data, security and agent platforms, while its priorities for computing capacity begin with frontier-model development and extend to consumer products and enterprise services.

Ashkenazi said Google Cloud’s backlog reached $514 billion, with the majority related to typical Google Cloud Platform contracts, and said Alphabet expects just over 50% of that backlog to become revenue over the next 24 months. She said the company began recognizing revenue from sales of TPU systems delivered to customer data centers in Q2, expects a relatively small portion of the related agreement revenue in FY2026, and expects the vast majority in 2027.

On advertising, Philipp Schindler said Google Search and other advertising revenue rose 17%, with retail making the largest contribution and finance, technology, and media and entertainment also contributing. He said Gemini is being applied across advertising infrastructure and tools to improve matching between user queries and advertisements. Ashkenazi said YouTube advertising revenue increased 13%, while subscriptions, platforms and devices revenue grew 15%, led by YouTube subscriptions and Google One.

When analysts asked about investment levels and supply constraints, Ashkenazi said Alphabet evaluates capacity needs over multiple years and would continue investing while it sees returns. Pichai said the company uses a return-on-invested-capital framework and factors higher input costs into the pricing of its solutions. Ashkenazi said Alphabet plans to use third-party capacity in Q3 while it builds internal capacity, which she said would pressure Google Cloud operating margin in the near term. She also said the company does not disclose margins for individual TPU products.

When asked about frontier-model competition, Pichai said Alphabet was training Gemini 4 and intended to offer models at different performance and cost points. He said the company would continue iterating on its models as it develops Gemini 4.

Guidance

Ashkenazi updated Alphabet’s FY2026 capital-expenditure guidance to $195.0 billion–$205.0 billion from its previous estimate of $180 billion to $190 billion. She said Alphabet expects capital expenditures to increase significantly in FY2027, without providing a numeric FY2027 range. The company also expects the vast majority of revenue from existing TPU-system sales agreements to be realized in FY2027.

How analysts reacted

Analysts’ price targets: $340.00 to $515.00, $426.50 on average (as of 18 October 2026).