Google Cloud was a small however mighty contributor to Alphabet’s Q2 earnings
In sum – what to know:
AI paying off – Google Cloud remains to be a comparatively small portion of Alphabet’s total enterprise. However it’s seeing significantly robust progress, pushed by AI, and the corporate is seeing demand throughout segments for AI-enhanced providers.
Extra massive offers – The variety of $250 million and $1 billion offers that the corporate is making have elevated year-over-year.
CapEx up – Alphabet raised its capex steering for the yr by $10 billion.
Alphabet delivered robust second quarter outcomes, with Google Cloud seeing greater than 30% income progress year-on-year as the corporate advantages from hovering demand for AI infrastructure and providers. That demand signifies that the corporate plans to spend a further $10 billion on infrastructure this yr.
Alphabet delivered consolidated revenues of $96.4 billion for the quarter, up 14% year-on-year or 13% when forex impacts had been accounted for. Google Companies accounted for $83 billion of that, with 12% progress. Google Cloud, in the meantime, noticed its revenues soar 32% in comparison with the identical time final yr, to $13.6 billion. Google Cloud’s backlog was up 38% year-over-year and now exceeds $100 billion.
“AI is positively impacting each a part of the enterprise, driving robust momentum,” stated CEO Sundar Pichai through the quarterly name.
The corporate invested $22.4 billion in capital expenditures through the quarter, with most of it going to infrastructure. Servers accounted for two-thirds of infrastructure funding, and the opposite one-third went to information facilities and networking tools. And Alphabet goes to spend much more this yr on capex than it had beforehand deliberate, elevating steering from an estimated $75 billion to $85 billion.
“Whereas we now have been working onerous to extend capability and have improved the tempo of server deployment, we anticipate to stay in a decent demand provide setting going into 2026,” stated CFO Anat Ashkenazi on the decision, reflecting an industry-wide provide pinch.
The corporate’s search phase additionally noticed progress, and Pichai highlighted the AI facet of that enterprise as properly. He stated that Google’s AI Overviews function now has over 2 billion month-to-month customers all over the world. He additionally stated that AI options “trigger customers to look extra, as they be taught that search can meet extra of their wants.” The kinds of queries which have AI Overviews are related to a ten% enhance in question volumes, he added.
Total, Pichai credited Alphabet’s robust market place to its in depth AI infrastructure, AI analysis (together with its fashions and instruments) and the implementation of AI throughout Google instruments and platforms.
He additionally identified a number of stats that illustrated the demand for Google Cloud Platform (GCP) providers.
–GCP is signing extra massive offers. Offers valued at greater than $250 million doubled year-over-year within the first half of 2025, Pichai stated. And through that very same interval, Alphabet signed the identical variety of $1 billion+ offers that it did throughout the entire of 2024.
–Its buyer base is rising quickly. The variety of new GCP prospects was up almost 30% simply from the primary quarter to the second quarter of this yr, Pichai stated.
–Enterprises are utilizing its AI instruments. Pichai stated that greater than 85,000 enterprises, together with giants like Salesforce, at the moment are utilizing its Gemini AI software program.
Alphabet executives additionally supplied some extra examples of how Google Cloud prospects are utilizing its AI capabilities. Wayfair, Pichai stated, is “leveraging our databases built-in with AI to streamline information pipelines and ship extra personalised buyer experiences. … Goal is utilizing our Gemini-powered menace intelligence and safety operations brokers to enhance cybersecurity.” Chief Enterprise Officer Philipp Schindler talked about that PayPal is increasing its Google Cloud adoption for “AI-driven suggestions, transaction processing, and enhanced safety.”
At Google Cloud Subsequent earlier this yr, the corporate had introduced Agentspace, a platform to allow companies to construct their very own AI brokers. Pichai stated that greater than one million subscriptions are already on the books for Agentspace, which isn’t but usually accessible.
