Stronger cloud and YouTube ad revenue help push Alphabet stock to fresh highs after earnings call
A US$106bn cloud services backlog is pushing Alphabet to increase its 2025 capital spending forecast by US$10bn, as per the company’s second-quarter earnings call.
The revised figure of US$85bn, up from its US$75bn projection in February, reflects “strong and growing demand for our Cloud products and services,” said Alphabet finance chief Anat Ashkenazi.
The company had already exceeded Wall Street’s original US$58.84bn estimate earlier this year.
Ashkenazi said that despite an “improved” pace of server deployment, investors should expect a further capital increase in 2026 “due to the demand as well as growth opportunities across the company.”
Although she did not detail what those opportunities are, she confirmed the company will provide more clarity in a future earnings call.
Google Cloud revenue reached US$13.62bn in the quarter, a 32 percent year-over-year increase, according to CNBC.
The surge in demand, driven in part by artificial intelligence adoption, prompted Alphabet to accelerate data centre construction and server purchases.
About two-thirds of second-quarter capital expenditures went to servers and one-third to data centre and networking equipment, Ashkenazi noted.
OpenAI also plans to use Google’s cloud infrastructure for its ChatGPT service, Alphabet CEO Sundar Pichai said.
According to CNBC, he added that “we are very excited to be partnering with them.”
Alphabet’s advertising and search units maintained growth, bringing in US$71.34bn and US$54.19bn respectively.
YouTube advertising revenue came in at US$9.8bn, exceeding the US$9.56bn estimate by StreetAccount.
The company’s overall second-quarter revenue rose to US$96.43bn, up 14 percent year over year, with net income climbing nearly 20 percent to US$28.20bn.
Earnings per share stood at US$2.31, beating analysts’ expectation of US$2.18, as reported by CNBC.
Alphabet’s Gemini app reached 450 million monthly active users, while AI Overviews, its AI-driven search summary feature, now serves over 2 billion monthly users across 200 countries and territories, Pichai said during the earnings call.
The company also raised its profile in the AI talent market.
Earlier in July, Alphabet acquired AI startup Windsurf in a US$2.4bn deal that included CEO Varun Mohan and several researchers.
The acquisition also licensed Windsurf’s coding technology.
Ashkenazi said Alphabet makes “sure that we invest appropriately to have the best and brightest minds in the industry.”
Total operating expenses rose 20 percent to US$26.1bn, primarily driven by a US$1.4bn charge related to legal settlements, Ashkenazi said.
That includes the US$1.37bn settlement announced in May by Texas Attorney General Ken Paxton over a 2022 data privacy lawsuit against Google.
The “Other Bets” division, which includes self-driving unit Waymo and life sciences firm Verily, posted revenue of US$373m and a US$1.25bn loss.
Both figures were up from a year earlier.
According to BNN Bloomberg, Alphabet’s stock rose 1 percent following the earnings report and helped lift the Nasdaq composite and S&P 500 to record highs.
Nvidia also rose 1.7 percent, while Tesla’s 8.2 percent decline offset broader AI-driven market optimism.
