Alphabet, Google's parent company, said on the 22nd (local time) that second-quarter revenue rose 24% from a year earlier to $119.8 billion (about 177 trillion won). The cloud business drove growth, but cash flow swung to a deficit due to the fallout from aggressive artificial intelligence (AI) infrastructure investments.
Alphabet's second-quarter revenue topped the market estimate of $116.9 billion compiled by market data firm LSEG. It marked 12 consecutive quarters of double-digit revenue growth.
Operating profit rose 30% from a year earlier to $40.77 billion (about 60 trillion won), and net profit surged 298% to $112.1 billion (about 165 trillion won). Earnings per share (EPS) was $9.11, far above the market estimate of $2.89.
However, the sharp jump in net profit and EPS was largely influenced by the rise in the value of corporations' equity held by Alphabet. Alphabet holds equity in Anthropic and SpaceX, and in the second quarter alone it posted nearly $100 billion in valuation gains from higher related equity values.
The cloud business led second-quarter earnings growth. By business, cloud revenue was $24.8 billion (about 37 trillion won), up 82% from a year earlier. It far exceeded the market estimate of $22.46 billion.
Search revenue was $63.3 billion (about 94 trillion won), and advertising revenue was $81.63 billion (about 121 trillion won), up 17% and 13%, respectively.
Google services institutional sector revenue rose 15% to $94.5 billion (about 140 trillion won), and YouTube advertising revenue increased 13% to $11.1 billion (17 trillion won). Alphabet said that during the recently held "2026 North and Central America World Cup," more than 1.7 billion users worldwide watched World Cup-related videos on YouTube. It added that Google search volume during the World Cup also hit a record high.
Users of Google's AI model "Gemini" also increased. Monthly active users (MAU) of the Gemini app reached 950 million, exceeding the market estimate of 920 million. The number of API tokens processed per minute rose to 22 billion from 16 billion in the previous quarter.
Sundar Pichai, Alphabet's chief executive officer (CEO), said, "Alphabet's second-quarter revenue grew 24% from a year earlier, and Google Cloud revenue increased significantly on the back of demand for AI infrastructure and AI solutions," adding, "About 90% of the Fortune 100 corporations use Gemini Enterprise."
However, as investments related to AI infrastructure, including data centers, surged, free cash flow (FCF) turned to a deficit of $5.86 billion. Bold AI investments have become a financial burden. The company's capital expenditures in the second quarter were $44.9 billion, up 100% from a year earlier.
Despite strong results, Alphabet's stock price fell 2% intraday. The company raised its capital expenditures (CAPEX) outlook for the year to $195 billion–$205 billion from $180 billion–$190 billion to secure an edge in the AI race.
Chief Financial Officer (CFO) Anat Ashkenazi said on a conference call held after the earnings release that day, "We raised our capital expenditure outlook as we rapidly expand infrastructure supply capacity to meet growing AI demand," adding, "Supply still cannot keep up with demand."