Alphabet (GOOGL), Google’s parent company, reports second-quarter earnings today after the market closes. Wall Street expects double-digit growth. But investors are watching one thing more closely: can the company’s massive artificial intelligence spending start to pay off?
The stock has climbed sharply over the past year. It has also pulled back from its May highs heading into the print. Here is what a general investor should watch for.
The Numbers Analysts Expect
Consensus estimates point to revenue of roughly $116.8 billion, up about 21% from a year earlier. Analysts expect earnings of approximately $2.89 per share. Alphabet has beaten estimates for several straight quarters. That track record raises the bar for today’s report.
Google Cloud grew 63% year over year last quarter, the fastest pace among major cloud providers. Total company revenue rose 22% to $109.8 billion. The cloud unit’s profit margin nearly doubled too.
Net income also jumped, but unrealized gains on Alphabet’s stakes in companies like SpaceX drove much of that increase. Investors will look past the headline profit number today. They want to gauge how much came from actual operations, not paper gains. Cloud growth, not the profit headline, is the number that matters most this quarter.
AI Spending Is the Real Story
Alphabet has guided for $180 billion to $190 billion in 2026 capital spending. That’s the money it spends building data centers and AI chips, however, thatfigure has tested investor patience. The company recently raised fresh equity to help fund the buildout, a move that broke a decades-long habit of funding growth internally.
Cloud’s roughly $460 billion order backlog fuels the bull case and points to years of future revenue already booked. The bear case is simpler; slow profit conversion, or a Gemini rollout that keeps slipping, could send the stock lower regardless of today’s headline numbers.
What Else Could Move the Stock
Search advertising remains Alphabet’s largest business and Investors want reassurance that AI-generated search summaries aren’t eroding traditional ad revenue. Some Wall Street desks have also rotated out of Meta stock and into Google because they’re betting Alphabet’s cloud and chip business offers a clearer path to AI profits than its rivals.
Alphabet’s custom AI chips, called Tensor Processing Units, add another wrinkle. The company recently started selling this chip technology to outside customers. Any update on that business could reshape how analysts view Alphabet’s AI strategy beyond its own products.
The takeaway for most investors is simple. The market wants proof that Alphabet’s AI bet is turning into durable profit, not just bigger bills, so Strong revenue alone won’t be enough today.
Watch how management addresses capex, Cloud backlog conversion, and the Gemini timeline on today’s call. Those answers could move the stock more than the quarterly numbers themselves.