Alphabet Q2 2026 earnings preview: Google Cloud growth, TPU sales and Gemini in focus

When is Alphabet reporting earnings?

Alphabet will report second-quarter (Q2) 2026 results on Thursday, 23 July at 06.00am AEST after the United States (US) market close.

Q1 FY2026 review: cloud revenue surges as record net income gets an equity-gains boost

Alphabet delivered its third consecutive quarter of revenue above the $100 billion mark in Q1, with revenue up 22% year-on-year (YoY) to $109.9 billion. Operating income rose 30% to $39.7 billion on a record 36.1% margin.

Google Cloud was the standout performer: revenue accelerated to $20.0 billion (+63% YoY) — the fastest growth rate among major cloud service providers — with operating margin expanding sharply to a record 32.9% from 17.8%, while backlog nearly doubled sequentially to a record $462 billion.

Net income surged 81% to a record $62.6 billion, with earnings per share (EPS) rising to a record $5.11. However, $37.7 billion of other income — including unrealised mark-to-market gains on Alphabet's minority equity stakes in Anthropic and SpaceX — drove nearly all of the earnings beat. Stripping this out, EPS would have missed the $2.63 consensus estimate by a cent. Management raised full-year capital expenditure (capex) guidance to $180–190 billion and flagged a further 'significant increase' for 2027.

Q2 FY2026 preview: can Google Cloud's growth crown survive a fresh set of rivals?

LSEG consensus projects Q2 revenue of $116.8 billion (+21.1% YoY), a pace broadly in line with Q1's 21.8%. Google Cloud remains the primary growth engine, with growth of around 63% anticipated. Notably, other bets — the segment housing autonomous transportation unit Waymo — are expected to return to growth after two consecutive quarters of contraction.

Stripping out the equity-driven swing in other income, operating income is expected to grow faster than revenue, with margin expanding by nearly 3 percentage points to 35.3%, reflecting continued operating leverage from Cloud's scale-up and the efficiency gains management flagged on the Q1 call.

Source: LSEG

Five questions for Alphabet's earnings call

1. Can Google Cloud's growth crown survive new entrants? Google Cloud grew 63% in Q1, ahead of Azure (40%) and AWS (28%). Meta's newly announced 'Meta Compute' signals a future competitor. Forward guidance on whether Google Cloud can sustain this pace of growth will shape the leadership narrative.
2. Are TPU external sales converting into actual revenue yet? Alphabet is commercialising its custom AI chips, Tensor Processing Units (TPUs), by selling capacity directly to external cloud providers and preparing a Blackstone-backed neo-cloud venture that will rent TPU compute directly to AI labs and enterprises from 2027. Management has guided that hardware sales will begin contributing later in 2026, with the bulk landing in 2027. Investors will be looking for evidence of whether Alphabet's chip business is becoming a genuine second revenue stream, rather than remaining an internal cost edge.
3. How is the capex-fuelled cash burn evolving? Capex rose 107% YoY to $35.7 billion in Q1; FY2026 guidance sits at $180–190 billion, with June's $84.75 billion equity raise earmarked for AI infrastructure, on top of around $40 billion raised via debt this year for general corporate purposes. Free cash flow fell 47% YoY in Q1 — whether that compression continues, alongside any early word on 2027 scale, is the key risk to watch.
4. Is Gemini gaining real ground on ChatGPT and Claude? Google's model family has closed the perception gap with OpenAI and Anthropic over the past two quarters, and the scheduled 17 July launch of Gemini 3.5 Pro gives management a fresh data point to reference. The market will be listening for usage metrics — Gemini app monthly active users (MAUs), application programming interface (API) adoption, and enterprise deals — as the real test of whether that momentum is translating into share gained from rivals.
5. Is Search's ad engine keeping pace with the AI-driven shift in how people search? With query behaviour moving towards AI Mode/AI Overviews, whether monetisation per query holds up remains a persistent question for investors.

Analyst sentiment: buy ratings dominate ahead of the earnings

Wall Street holds a broadly positive outlook on the stock. Of 33 analysts tracked by TipRanks, 28 carry a 'buy' rating, with five holds and no sells. The average 12-month price target for the Class A shares of $428.43 implies 15.5% upside from the 15 July close. The most bullish target stands at $515, while the most conservative sits at $349.94.

Options markets are pricing in a 5.3% expected move into the 22 July earnings report.

TipRanks insights

GOOGL technical outlook: key levels to watch

Alphabet's share price has gained 38% since bottoming at $272.11 on 30 March, outperforming the broader tech-heavy Nasdaq 100, but remains roughly 9% below its peak.

The stock is currently testing resistance at the 50-day moving average (MA). A decisive break above the 50-day MA and the pivot point at $376 would open the path towards testing the historic high of $408.61. Conversely, disappointing earnings could drive the stock towards immediate support at the 20-day MA, near $357.69.

Alphabet Class A daily price chart

• _{Source: TradingView. The figures stated are as of 16 July 2026 Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}