Alphabet (GOOGL) Earnings Preview: Search, Cloud and AI Spending Take Center Stage

Earnings from Google parent Alphabet (GOOGL) Wednesday will provide an important test of whether artificial intelligence investments are accelerating revenue growth enough to justify rising capital expenditures, infrastructure costs and shareholder dilution.

The company is scheduled to report second-quarter results after Wednesday’s closing bell, with its conference call beginning at 4:30 p.m. ET.

Alphabet shares are up approximately 13% year to date and 90% over the past 12 months, although the stock has retreated 14% from its May all-time high. Based on GOOGL’s closing price of $351.99 on July 20, the options market is pricing in an earnings move of roughly 3.5% in either direction. That implies a potential post-earnings trading range of approximately $339.50 to $364.50.

Wall Street expects Alphabet to report earnings of approximately $2.87 per share, an increase of 24.2% from $2.31 during the same quarter last year, according to Zacks. Revenue is projected at approximately $116.9 billion, up 21.3% from $96.4 billion in the second quarter of 2025. Alphabet’s prior-year results included 14% revenue growth and a 22% increase in earnings per share.

Here are four things to watch when GOOGL reports earnings:

• Google Search will remain the most important divisional focus. Analysts expect Search and other revenue of approximately $63.5 billion, representing growth of roughly 17% from a year earlier. Investors will listen for evidence that AI Overviews and Gemini are increasing query activity and commercial engagement without reducing advertising clicks or profitability. Paid-click growth, pricing, advertiser demand and management’s ability to place advertisements within AI-generated search results will be closely examined.
• YouTube will provide another read on the digital advertising market. Analysts will focus on advertising growth, Shorts monetization, connected-television viewing and subscription revenue from YouTube Premium and YouTube TV. Expectations call for high-single-digit YouTube advertising growth, while Google One and other subscription products are becoming a larger source of recurring revenue.
• Google Cloud may generate the greatest interest by investors. Cloud revenue is projected near $22.5 billion, up approximately 65% year over year, following 63% growth during the first quarter. Analysts will watch the conversion of Alphabet’s rapidly expanding backlog, demand for Gemini models, sales of its custom Tensor Processing Units and Cloud operating margins. Management previously acknowledged that capacity constraints limited growth, while integration expenses related to Wiz could create a modest margin headwind.
• Alphabet’s spending outlook could be just as influential as its revenue results. The company expects $180 billion to $190 billion of capital expenditures in 2026 and has indicated that spending could rise significantly again in 2027. Investors will want evidence that Cloud growth, advertising monetization and AI-product adoption are generating an adequate return on that investment. Alphabet also raised $84.75 billion of equity capital to help finance its AI infrastructure expansion, introducing concerns about dilution. 

The company has faced mounting challenges during the past year, including competition from OpenAI and other AI-search providers, rising computing costs, and continued regulatory pressure. European regulators recently ordered Google to provide greater access to competing search and AI services, while the company is appealing a U.S. ruling that it maintained illegal monopolies in online search.

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