Google earnings live updates: Alphabet's AI outlook, cloud growth in focus

Despite the war in Iran and ongoing concerns about its impact on the broader economy, the digital advertising market appears to be humming along.

Analysts at Bernstein wrote in a note on Tuesday that their recent advertising channel checks “were strong for Meta and Google,” implying that the two digital ad titans will likely report another healthy quarter of sales growth.

Wolfe Research analysts agree, writing in a note on Monday that their ad checks show a “resilient environment” that suggests “stability in Q2 despite macro concerns.” And they see a boost from the World Cup and upcoming midterm elections. As for threats posed by OpenAI, Wolfe’s analysts described those as “headline risks,” but said, “Google Search ad demand trends continue to imply at least stable trends.”

Meta reports results next week.

— Jonathan Vanian

Google’s earnings come on the heels of some major high-profile departures, as the battle for top artificial intelligence talent heats up.

Gemini co-head Noam Shazeer announced in June that he was joining OpenAI, less than two years after returning through a partnership with his startup. Senior researcher scientist John Jumper left Google Deepmind for Anthropic last month.

Technology companies have spent billions in recent months to lure top talent and acquire AI capabilities. The frontier labs, however, are starting to face a new reality, as businesses begin reining in token costs and seek out cheaper alternatives.

Software companies have also fallen victim to the AI talent drain as frontier labs build out the enterprise layer.

—Samantha Subin

Investors will be paying attention to Alphabet’s investment income after a recent Anthropic funding round pushed up the value of Google’s holding in the model developer.

In 2023, Google first bought a 10% stake in Anthropic. The search company announced plans to invest up to $40 billion more in April, having invested more than $3 billion in the startup already. By May, with Anthropic’s Claude Code gaining attention for its ability to quickly write application code, the company said investors had valued it at $965 billion. That was up from $380 billion as of February.

Alphabet is also sitting on a stake in SpaceX, which went public in June, after first investing $900 million in the rocket maker in 2015. SpaceX shares have drifted down about 8% since the record-setting initial public offering.

Three months ago, Google touted a $37 billion gain on equity securities.

—Jordan Novet

Google is trying to keep up with OpenAI and Anthropic with its cutting-edge Gemini AI models, while also offering models at prices that recognize a more frugal approach to AI spending.

On Tuesday, the company released three new Gemini models, including its clearest answer yet to Anthropic‘s lead in cybersecurity. Gemini 3.5 Flash Cyber is designed to detect and patch software vulnerabilities and will initially be available only to governments and trusted partners through a limited-access pilot. Google said the specialized model runs at a lower price per token than larger models.

With Gemini 3.6 Flash, Google aims to bolster its coding assistant technology while using up to 17% fewer tokens and offering a lower price per token than the previous model.

The pricing war in AI is heating up as demand soars for open-source models, largely out of China. The hottest recent example is Moonshot AI’s Kimi K3.

— MacKenzie Sigalos

Google’s stock is on pace for a third straight month as the company heads into the second-quarter print on mounting AI skepticism.

Shares are up 11% for the year but have dropped 1% in May, 6% in June and are pacing for a nearly 3% loss in July.

That puts the company behind Apple and Nvidia for the year.

Google’s stock drop comes as skepticism swirls over skyrocketing artificial intelligence spending and businesses pour billions into the infrastructure buildout.

— Samantha Subin

Investors shouldn’t expect Alphabet’s epic spending spree to change course next year.

Finance chief Anat Ashkenazi said in April that 2027 capex is likely to “significantly increase” from the up to $190 billion planned for this year.

Evercore analysts wrote in a note over the weekend that “when the CFO warns about following year capex in the March Quarter, the plans are going to be aggressive.” The Evercore analysts then — jokingly — asked if the number could hit “$300B? $350B?!”

Ultimately, they settled on an estimate of $262 billion, and noted that they’re concerned “that capex spend could ramp higher than this.” The consensus estimate for Alphabet’s 2027 capex is about $257 billion, according to FactSet.

— Jonathan Vanian

Analysts expect YouTube’s advertising revenue growth to ease up as the video engine reaches greater scale.

The unit should contribute $10.81 billion in revenue, which would imply roughly 10% growth from a year earlier, decelerating from 11% expansion in the first quarter.

In May, at the I/O developer conference, Google said YouTube had reached 3 billion users, alongside the company’s search engine, Gmail, Chrome and Android. The milestone makes the site an increasingly compelling destination for advertisers.

Meta had 3.56 billion “daily active people” across its apps in the first quarter.

Evercore ISI analysts came away with a favorable assessment of YouTube’s stature following a June survey. In a note to clients on Sunday, they pointed to relatively attractive advertising costs and “linear TV leakage.”

—Jordan Novet

Google is trailing Amazon and Microsoft in cloud computing, but it’s been growing faster.

Second-quarter revenue in Alphabet’s Google Cloud unit, which includes infrastructure and Google Workspace productivity subscriptions, is expected to show 64% growth from a year earlier to $22.24 billion, according to StreetAccount.

That’s an acceleration from 63% expansion in the first quarter, which topped market leader Amazon Web Services’ 28% growth. At Microsoft, revenue from Azure and other cloud services increased 40%.

Large companies are running more apps on Google’s cloud, incorporating the company’s AI models, CEO Sundar Pichai said on the last earnings call in April. Additionally, the Gemini Enterprise assistant for corporate workers, which starts at $21 per person per month, is gaining traction, he said.

Demand for Google’s tensor processing units, or TPUs, is also ramping at AI labs. In April, Google touted a cloud TPU for training AI models and one that handles inference jobs.

The $29.5 billion acquisition earlier this year of cloud security company Wiz is also boosting cloud growth. Google is seeing so much demand that it inked a deal in June with Elon Musk‘s SpaceX, agreeing to pay $920 million a month for AI compute capacity.

— Jordan Novet

Alphabet and its hyperscaler peers are spending boatloads of money on massive data center and related computing projects, and investors are paying close attention.

That puts a particular focus on Alphabet’s capital expenditures, or capex, which has been skyrocketing in recent quarters. In April, the company raised its 2026 capex guidance to between $180 billion and $190 billion, up from $175 billion to $185 billion.

The consensus estimate for Alphabet’s 2026 capex is $187.1 billion, according to FactSet. Among the web giants, Amazon is the only one expected to spend more, with analysts projecting capex of $200 billion, in line with the company’s forecast.

— Jonathan Vanian