Alphabet (GOOG) (GOOGL) launched its Q2 2026 earnings yesterday, July 22, after the close of markets. The earnings were a blended bag, with the company beating on the high line and lacking on the backside line. The stock is, however, down as we speak as buyers fret over the ever-growing capex to construct artificial intelligence (AI) infrastructure. In my earlier article, I famous that while GOOGL slipped below Berkshire Hathaway’s (BRK.A) (BRK.B) shopping for price in the June non-public placement, the stock wasn’t a screaming buy. I’ll look into Alphabet’s outlook and look at whether GOOGL stock is a compelling buy now.
Alphabet Q2 Earnings Snapshot
Let’s start by wanting at the headline numbers from Alphabet’s Q2 report. Revenues elevated 24% year-over-year (YoY) to $119.8 billion, with the quantity coming in forward of the $116.9 billion that analysts were anticipating. Google Search revenues rose 17% YoY, which was barely below estimates, while YouTube advert revenues rose 13%, beating estimates. What stole the show, however, was the 82% growth in cloud revenues. For context, consensus estimates called for a 63% growth, which was comparable to what the company posted in the earlier quarter.
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Alphabet’s cloud revenues have been growing much quicker than those of Amazon (AMZN) and Microsoft (MSFT), two of its larger rivals. The company’s cloud order backlog, which also consists of chips, rose by over $50 billion as in contrast to Q1 and surpassed $500 billion.
The stellar growth in cloud revenues was, however, dampened by two components. First, the company said that it expects margin stress in the close to time period as it is utilizing third-party compute capability to make up for the demand-supply mismatch. Second, it raised its 2026 capex price range to between $195 billion and $205 billion, which is $15 billion greater than the earlier steering.
Meanwhile, while buyers were prepared to overlook the capex hike announced during the Q1 earnings call and despatched the stock hovering almost 10%, this time around they are not as forgiving, and the stock is trading by nearly the same quantity in the reverse direction despite the mammoth growth in cloud revenues.
