Google Cloud revenue jumps 82% to $24.8 billion as Alphabet defends AI spending

Google Cloud revenue jumped 82% year over year at Alphabet. It reached $24.8 billion in the fiscal second quarter.

That gave the company a sharp retort. Investors have questioned the cost of the AI buildout and whether it is worth it.

Google Cloud tops estimates as total revenue hits $119.8 billion

The leap beat Wall Street’s own figure. On Wednesday’s earnings release, analysts had expected about $22.46 billion. It also beat the unit’s own recent cadence, with cloud sales having climbed 63% to $20 billion just three months ago. The segment’s unbilled contract backlog was now $514 billion, Google said, driven by companies buying its AI infrastructure and enterprise AI tools.

According to Cryptopolitan’s live coverage of the results, Alphabet posted total revenue of $119.8 billion, a 24% increase and better than the $116.93 billion expected by LSEG-tracked analysts. It was the 12th consecutive quarter of double-digit growth.

Earnings came in at $9.11 per share versus a $2.89 forecast. About $98 billion of that came from other income, mostly paper gains on Alphabet’s holdings in other companies.

According to Cryptopolitan, finance chief Anat Ashkenazi told analysts that the company still doesn’t have enough computing capacity to serve its cloud customers and its own product teams.

For the third quarter, her solution is to lease more infrastructure from third parties, while Google continues to build out its own. This approach, she said, would help onboard customers but squeeze margins in the short term.

Alphabet invested $44.9 billion in capital expenditures during the quarter. Some 60% went to servers, the rest to data centers and networking. The company expects full-year capital expenditures of $180 billion to $190 billion.

Some of the biggest customers of the cloud unit need unusually large amounts of compute, and serving them through third parties may be costly for months but should still pay off over the life of the contracts, said the CEO, Sundar Pichai.

Gemini usage climbs as Pichai points to 2027

Google’s case was built on adoption numbers. Gemini app monthly active users increased to 950 million from 750 million in the fourth quarter of 2025. Gemini models process 22 billion tokens per minute, the company said.

About 90% of Fortune 100 companies are using Gemini Enterprise, according to Cryptopolitan. Google’s Antigravity coding platform now has more than 2.4 million weekly users, although Pichai would not say how many are paying customers.

Asked when the spend pays off, Pichai pointed to compute-capacity investments in 2027. Demand signals, including long-term deals, are looking better than a year ago, he said.

“Our AI investments are redefining what’s possible across every part of our business,” he said on the call to analysts.

The results weren’t perfect. Search revenue was $63.3 billion, just shy of the $63.4 billion analysts wanted and Ashkenazi cautioned that Search has a more difficult year-over-year comparison in the third quarter.

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