GOOGL 2026 Q2

Cloud revenue growth accelerated meaningfully even after stripping out the impact of new TPU system sales, indicating underlying demand strength beyond the new hardware revenue stream.

“Cloud revenue growth accelerated meaningfully even after excluding the impact of TPU system sales.”— Anat Ashkenazi, CFO

Management flagged that in Q3 the company will begin lapping a prior-year acceleration in Search performance, signaling a tougher year-over-year comparison ahead for Search growth rates.

“we will begin lapping an acceleration in Search performance that began in the third quarter last year”— Anat Ashkenazi, CFO

YouTube's subscription business (led by Music and Premium) is now growing faster than YouTube's advertising business, a shift in the relative growth composition of YouTube revenue streams.

“YouTube's subscription business, which thrives across living room screens, is growing faster than ads”— Philipp Schindler, President & Chief Business Officer

Cloud backlog jumped by more than $50 billion sequentially to $514 billion, an unusually large sequential increase driven by strong Enterprise AI demand, implying accelerating future revenue recognition.

“Google Cloud's backlog increased by more than $50 billion sequentially, reaching $514 billion in the second quarter.”— Anat Ashkenazi, CFO

Cloud new-customer acquisition velocity more than doubled year-over-year, a marked acceleration in new logo growth versus prior periods.

“we are winning new customers, more than doubling our acquisition velocity year-over-year”— Sundar Pichai, CEO

Existing cloud customers are now exceeding their contractual commitments by more than 50%, which management explicitly called an acceleration over the prior quarter's expansion rate.

“expanding their usage and exceeding their commitments by more than 50%, an acceleration over last quarter”— Sundar Pichai, CEO

Search query usage hit an all-time high during the World Cup, a record level of engagement management specifically called out as notable.

“Search usage hit an all-time high during the World Cup this year.”— Sundar Pichai, CEO

Transactions on the Google Cloud Marketplace grew over seven times year-over-year, an extreme growth rate in partner-driven demand that management highlighted as notable.

“transactions on Google Cloud Marketplace growing over seven times year-over-year”— Sundar Pichai, CEO

The company recognized revenue from TPU system sales for the first time in Q2 after delivering systems to customer data centers, with the vast majority of related revenue expected to ramp into 2027.

“we also began to recognize revenues from TPU system sales, which we delivered to customer data centers for the first time in Q2”— Anat Ashkenazi, CFO

Monthly token processing across model APIs rose to approximately 22 billion tokens, up from 16 billion just one quarter earlier, showing a sharp sequential acceleration in AI usage.

“Our model APIs are now processing approximately 22 billion tokens per month. That's up from 16 billion just a quarter ago.”— Sundar Pichai, CEO

The Gemini app reached 950 million monthly active users with daily active users tripling over the past year, a sharp acceleration in engagement.

“the Gemini app, which now has 950 million monthly active users with daily active users tripling in the last year”— Sundar Pichai, CEO

Since launching Omni video creation at I/O in May, daily active users creating videos rose 40%, indicating rapid early adoption of the new feature.

“Since launching at I/O in May, there's been a 40% increase in daily active users creating videos on the Gemini app.”— Sundar Pichai, CEO

AI mode surpassed 1 billion monthly active users since its global expansion last October, a milestone management framed as a notable adoption threshold.

“since expanding AI mode globally last October, we have surpassed 1 billion monthly active users.”— Sundar Pichai, CEO

AI workloads scanned and protected by the security platform grew more than 45% quarter-over-quarter, a sharp sequential acceleration in adoption of AI-powered security features.

“we have seen a more than 45% quarter-over-quarter increase in the number of AI workloads scanned and protected by our security platform.”— Sundar Pichai, CEO

Google Cloud operating margin jumped from 20.7% a year ago to 35.6%, with operating income more than tripling, reflecting a sharp improvement in Cloud profitability.

“operating margin increased from 20.7% in the second quarter last year to 35.6%.”— Anat Ashkenazi, CFO

Management expects to expand use of costlier third-party compute capacity in Q3 as a bridging strategy amid supply constraints, which will create new near-term pressure on Cloud operating margins.

“That use of third-party capacity will put some pressure on operating margins for Cloud in the near term.”— Anat Ashkenazi, CFO

Integration of the Wiz acquisition is creating a new near-term margin headwind for Cloud that was not previously called out.

“the integration of Wiz creates some near-term headwind related to the acquisition.”— Anat Ashkenazi, CFO

Management said the ramp-up in technical infrastructure investment will increasingly pressure the P&L via higher depreciation and data center operating costs such as energy going forward.

“the significant increase in our investments in technical infrastructure will continue to put pressure on the P&L in the form of higher depreciation expense”— Anat Ashkenazi, CFO

CEO acknowledged Google is not currently at the frontier in agentic coding relative to competitors and is directing significant effort, including a larger Gemini 4 base model, to close that gap.

“There are many attributes on which we are still at the frontier and there are areas where we have acknowledged we need to improve”— Sundar Pichai, CEO

Alphabet raised its full-year 2026 CapEx guidance to $195-205 billion from a prior $180-190 billion range, citing an acceleration in the delivery of capacity to meet growing AI demand.

“updating our full year 2026 CapEx guidance range to $195 billion to $205 billion, up from our previous estimate of $180 billion to $190 billion”— Anat Ashkenazi, CFO

Management introduced a new bridging strategy of leasing third-party compute capacity in Q3 while internal capacity is built out, a new approach to addressing supply constraints.

“we plan to expand the use of third-party capacity in Q3 as a bridging strategy while we build up more internal capacity”— Anat Ashkenazi, CFO

Management now expects a slight FX headwind to consolidated revenue in Q3, reversing from the 1-percentage-point FX tailwind experienced in Q2, primarily affecting Search and YouTube ads.

“we would expect a slight FX headwind to our consolidated revenue in Q3 compared to a 1 percentage point FX tailwind in Q2”— Anat Ashkenazi, CFO