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Google stock fell late Wednesday despite parent AlphabetGOOGL posting second-quarter earnings and revenue that topped Wall Street's targets thanks to better-than-expected growth in cloud computing. Meanwhile, Google's internet search ad revenue only met expectations.
The internet giant reported Q2 results after the market close on Wednesday. Google earnings popped to $9.11 per share for the quarter ended June 30, up 300% from a year earlier, including a big boost from equity investments. Equity investments including SpaceXSPCX and Anthropic boosted earnings by $6.26 per share.
The tech giant reports earnings under generally accepted accounting principles, also known as GAAP. Gross revenue rose 24% to $119.8 billion. Analysts polled by FactSet had projected EPS of $2.88 on revenue of $117.1 billion.
Excluding the boost from equity investments, Google's earnings were light, RBC Capital analyst Brad Erickson said in a report. "EPS of $9.11 reflected a $6.26 one-time gain on equity gains and when normalized, came in at $2.85 per share versus the Street at $2.88 per share," he said.
Google Cloud Growth Accelerates
Google reported Q2 cloud-computing revenue of $24.77 billion, up 82%, driven by artificial intelligence workloads, handily beating estimates of $22.46 billion. For the first time, Google included third-party sales of "TPU" AI chips in cloud revenue. Customers include Anthropic.
Google said its cloud computing order backlog jumped to $514 billion, up from $460 billion in Q1. The backlog is converted into realized revenue as new data centers come online and crunch artificial intelligence-related workloads — training AI models and processing AI apps.
On Google's Q2 earnings call with Wall Street analysts, Chief Financial Officer Anat Ashkenazi said the company plans to lease AI data center capacity from other cloud companies to meet customer demand. Ashkenazi added that the move could pressure profit margins.
Google's Q2 internet search-advertising revenue came in at $63.27 billion, up nearly 17%, in line with estimates of $63.3 billion amid the shift to new formats such as "AI Mode" and "AI Overviews." Rival OpenAI, meanwhile, now sells ChatGPT ads.
"The bar was high, and in our opinion, Google mostly cleared it," Evercore ISI analyst Mark Mahaney said in a report. "Most impressive are the cloud results — both the 82% revenue growth and the record-high 36% operating margin. Looks like a positive read-through for the AI trade."
Meanwhile, YouTube's Q2 advertising revenue of $11.05 billion, up 13%, topped estimates of $9.96 billion.
In extended trading on the stock market today, Google stock fell more than 4% to 326.04. Heading into the Google earnings report, shares had advanced 11% in 2026.
Google Stock Technical Ratings
Google increased its 2026 capital spending guidance to a range of $195 billion to $205 billion, up from $180 billion to $190 billion. In Q2, capital spending jumped 100% to $44.9 billion.
Google did not repurchase any of its own stock in Q2 amid higher capital spending. In the year-earlier quarter, Google repurchased $13.2 billion of its own stock.
Further, Alphabet stock holds an IBD Composite Rating of 83 out of a best possible 99, according to IBD Stock Checkup. IBD's Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock's strengths. The best growth stocks have a Composite Rating of 90 or better.
Meanwhile, Google stock has an Accumulation/Distribution Rating of E. That indicates heavy institutional selling of Alphabet shares.
Follow Reinhardt Krause on X, formerly Twitter, @reinhardtk_tech for updates on artificial intelligence, quantum computing, cybersecurity and cloud computing.
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