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[BUSINESS] · United States · 42 sources

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Alphabet reports Q2 2026 profit but negative free cash flow as AI capex rises to $205 bn

Alphabet posted a strong second‑quarter 2026 earnings report, with total revenue of $119.8 billion, up 24 % year‑on‑year, and Google Cloud revenue of $24.8 billion, up 82 % YoY. Net income reached $112.1 billion, largely driven by $98‑99 billion of unrealised gains on equity investments.

Capital expenditures surged to $44.9 billion, pushing the company’s 2026 capex guidance to $195‑205 billion. The higher spend drove free cash flow negative for the first time since 2004, slipping to about –$5.9 billion. The market reacted with a 6‑7 % drop in Alphabet shares, erasing roughly $300 billion in market value.

The Gemini app recorded 950 million monthly active users, underscoring Alphabet’s AI ambitions. Moody’s warned that the wave of AI‑driven capex is eroding cash flow and raising credit‑risk concerns for hyperscalers, including Alphabet.

Entities

Alphabet Inc. · Gemini · Google Cloud · Moody's Investors Service · Sundar Pichai

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