AI Takeaway
Alphabet's Q2 FY2026 revenue grew 24% YoY to $119.8B driven by Google Cloud (+82%) and Google Search (+17% within advertising), while net income surged 298% to $112.2B largely due to a $99.0B unrealized gain on equity securities (SpaceX and a private company), masking underlying operating performance which grew a more modest 30% to $40.8B.
Revenue
$119.8B
++24.23% YoY
EPS (Basic)
$9.23
++296.14% YoY
Operating Income
$40.77B
++30.38% YoY
Filed · Source: SEC EDGAR 10-Q filing
Alphabet (GOOGL) reported Q2 FY2026 revenue of $119.8B, up 24.2% year over year. The company posted net income of $112.19B, up 297.9% from a year earlier, with diluted EPS of $9.11.
Google Cloud revenues increased $11.1 billion, or 82%, to $24.8 billion in Q2 FY2026, driven by growth in Google Cloud Platform infrastructure and platform services. Segment operating income more than tripled to $8.8 billion from $2.8 billion a year ago, and the company began recognizing revenue from TPU system sales this quarter, with the significant majority to be recognized in 2027.
Source: 10-Q Item 2 MD&A
Other income (expense), net was $98.0 billion in Q2 FY2026 versus $2.7 billion a year ago, primarily due to $99.0 billion in net gains on equity securities, largely unrealized gains from the company's stakes in SpaceX and a private company.
Source: 10-Q Item 2 MD&A
In June 2026 Alphabet raised $49.6 billion in net proceeds via a combination of Class A/C stock and mandatory convertible preferred stock, established a $40.0 billion ATM equity program, and issued $20.3 billion in senior unsecured notes, all primarily to fund capital expenditures for AI infrastructure and global compute.
Source: 10-Q Item 2 MD&A
Capital expenditures were $44.9 billion in Q2 FY2026 alone and $80.6 billion for the six months ended June 30, 2026, versus $39.6 billion for the same six-month period in 2025, as the company significantly increases investment in technical infrastructure including servers, network equipment, and data centers.
Source: 10-Q Item 2 MD&A
The company accrued $2.1 billion in legal charges related to a Stockholm Patent and Market Court decision on a PriceRunner action ($1.5 billion in G&A, $581 million in OI&E), and paid a previously accrued $5.2 billion EU antitrust fine and interest in July 2026 following the EC's upholding of its 2018 Android decision.
Source: 10-Q Item 2 MD&A
Alphabet is significantly expanding investment in AI-optimized infrastructure, including custom TPUs, with capital expenditures of $80.6 billion in the first six months of FY2026 alone. These investments may not be commercially viable or generate adequate returns, and the company has entered large, long-duration commercial agreements including financial guarantees/backstops for third-party data centers and power infrastructure that could increase liabilities if counterparties fail to perform.
Source: 10-Q Item 1A
To meet AI compute demand, Alphabet is engaging in supply of TPU systems to customers, which the filing states 'may increase our costs and operational complexity.' Nonperformance by the company, counterparties, or vendors could lead to additional liabilities, excess capacity that cannot be easily redeployed, and non-payment risk.
Source: 10-Q Item 1A
Alphabet's long-term debt rose to $98.2 billion (from $23.6 billion a year ago), and the company raised $49.6 billion in equity/preferred stock and $20.3 billion in notes in Q2 FY2026 alone. The filing warns that difficulty accessing capital markets or managing this growing indebtedness, combined with dilutive equity issuances (including a new $40 billion ATM Program), could harm financial condition and depress stock price.
Source: 10-Q Item 1A
The company established a $40 billion ATM Program and issued Mandatory Convertible Preferred Stock in June 2026; conversions of this preferred stock or future sales under the ATM Program could dilute existing stockholders and depress Class A and Class C stock prices, per the filing's own risk disclosure.
Source: 10-Q Item 1A
Increasing adoption of AI technologies relying on large-scale data collection has led data protection authorities globally to adopt new interpretations of privacy laws (e.g., EU GDPR, Digital Markets Act, EU Data Act), raising risk of regulatory investigations, enforcement actions, fines, and required changes to business practices.
Source: 10-Q Item 1A
Reported EPS of $9.11 versus the $2.98 analyst consensus — a +206.2% beat for Q2 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $119.8B | $96.43B | +24.23% |
Cost of Revenue | $45.94B | $39.04B | +17.68% |
Operating Income | $40.77B | $31.27B | +30.38% |
Net Income | $112.19B | $28.2B | +297.90% |
EPS (Basic) | $9.23 | $2.33 | +296.14% |
EPS (Diluted) | $9.11 | $2.31 | +294.37% |
R&D Expense | $18.22B | $13.81B | +31.95% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $921.98B | $502.05B | +83.64% |
Current Assets | $343.52B | $166.22B | +106.67% |
Total Liabilities | $281.5B | $139.14B | +102.32% |
Current Liabilities | $126.11B | $87.31B | +44.44% |
Stockholders' Equity | $640.48B | $362.92B | +76.48% |
Cash & Equivalents | $55.91B | $21.04B | +165.79% |
Long-Term Debt | $98.17B | $23.61B | +315.83% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash FlowYTD | $84.86B | $63.9B | +32.81% |
Investing Cash FlowYTD | $-145.82B | $-40.74B | -257.95% |
Financing Cash FlowYTD | $86.32B | $-26.03B | +431.58% |
Share BuybacksYTD | $0 | $28.31B | -100.00% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Margin | 34.0% | 32.4% | +1.60% |
Net Margin | 93.7% | — | — |
ROE | 17.5% | — | — |
ROA | 12.2% | — | — |
Current Ratio | $2.724 | — | — |
Debt to Equity | $0.44 | — | — |
Expected release date, analyst estimates & what to watch
Google parent Alphabet delivered a standout Q1 2026, with revenue surging 21.8% YoY to $109.9B and net income nearly doubling (+81.2%) to $62.6B, driven by strong advertising and cloud momentum alongside a dramatic expansion of the balance sheet.
Alphabet (GOOGL) delivered a strong fiscal year 2025 with revenue growing 15.1% to $402.8B and net income surging 32.0% to $132.2B, driven by robust advertising and cloud performance, though long-term debt jumped 309% to $49.1B reflecting aggressive AI infrastructure investment.
Other companies in Interactive Media & Services
The filing does not disclose analyst consensus estimates, so a formal 'beat' cannot be confirmed from this source. However, revenue grew 24.2% YoY to $119.8B and diluted EPS was $9.11, up 294.4% YoY, though the EPS surge was driven mainly by a $99.0B one-time unrealized gain on equity securities rather than core operations.
Net income rose 297.9% YoY to $112.2B primarily because Other Income (Expense), net was $98.0B, driven by a $99.0B net gain on equity securities largely reflecting unrealized gains in Alphabet's stakes in SpaceX and a private company. Excluding this one-time item, operating income grew a more modest 30.4% to $40.8B.
Google Cloud revenue grew 82% YoY to $24.8B in Q2 FY2026, and segment operating income more than tripled to $8.8B from $2.8B a year earlier. The company also began recognizing revenue from TPU system sales this quarter, with the majority of related revenue expected in 2027.
Key risks include heavy AI infrastructure capital expenditures ($80.6B in six months), operational complexity from supplying TPU systems to customers, rising long-term debt ($98.2B, up from $23.6B YoY), and potential dilution from a new $40 billion ATM equity program and Mandatory Convertible Preferred Stock issued in June 2026.
Alphabet spent $44.9B on capital expenditures in Q2 FY2026 alone ($80.6B for the first six months), up sharply from $39.6B for the same six-month period in 2025, and management stated it expects to significantly increase infrastructure investment in 2026 relative to 2025 to build out AI compute capacity.