AI Giants Facing Investor Scrutiny

Alphabet’s second‑quarter 2026 results reaffirm the market’s focus on the company’s AI‑driven growth and the financial pressures that accompany it. Revenue rose 24 % YoY to $119.8 billion, led by an 82 % surge in Google Cloud revenue to $24.8 billion and robust advertising earnings of $81.6 billion. Operating margin expanded to 34 % and earnings per share jumped to $9.11, well above analysts’ expectations. The firm raised its full‑year capital‑expenditure outlook to $195‑$205 billion to fund AI data‑centers and custom chips, a move that pushed free‑cash‑flow into negative territory at $‑5.9 billion. Net profit of $112.1 billion was buoyed by $98 billion of unrealized gains on equity investments. Gemini’s AI suite now serves roughly 90 % of Fortune 100 firms, and the Gemini app logged 950 million monthly active users. After the earnings release, Alphabet’s shares slipped about 3 % in after‑hours trading, underscoring investor wariness about the widening cash‑flow deficit and recent delays to flagship Gemini models.