According to Chaoxiang Research, Google’s Q2 earnings report confirmed that AI monetization is accelerating. Cloud revenue grew 82% year-over-year to $24.77 billion, showing continued acceleration; TPU contributed over $1 billion in revenue for the first time as a standalone line, with backlog increasing by $52 billion quarter-over-quarter to $514 billion, indicating that AI compute demand remains far from saturated. Search revenue grew 17% year-over-year, and monthly active users of AI-powered features surpassed 1 billion. Capital expenditures for 2026 have been raised to $195–205 billion; J.P. Morgan believes this reflects supply-demand imbalances in compute capacity rather than cost pressures, with further growth expected in 2027. The firm maintains an Overweight rating and a price target of $420, representing approximately a 34% upside from current levels. Margin pressure stems from transitional factors such as third-party capacity bridging and TPU hardware sales, not structural deterioration. J.P. Morgan believes AI investments are now generating returns and recommends buying on dips.
JPMorgan: Google Cloud Revenue Surges 82% as AI Spending Delivers Returns
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Summary
JPMorgan highlights Google Cloud’s 82% revenue increase to $24.77 billion, driven by AI growth. TPU revenue reached $1 billion, backlogs rose to $514 billion, and AI users surpassed 1 billion. Search revenue climbed 17%. The firm raised its 2026 capital expenditure forecast to $195–205 billion, citing compute shortages. Altcoins to watch may benefit from this trend, as the Fear & Greed Index reflects rising market confidence. JPMorgan maintains an overweight rating with a $420 price target.
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