Google Cloud Revenue Rose 82% to $24.8 Billion in Q2 as Alphabet's Capex Doubled to $44.9 Billion

Google Cloud brought in $24.8 billion in the second quarter of 2026, up 82% from a year earlier. Alphabet CEO Sundar Pichai laid out the numbers on the company's Q2 earnings call.

The growth rate has climbed every quarter. Cloud revenue grew 34% in Q3 2025, 48% in Q4, 63% in Q1 2026 and 82% in Q2.

The numbers behind the Cloud surge

Cloud operating income more than tripled to $8.8 billion. Operating margin widened to 35.6%.

Alphabet reported $514 billion in contracted revenue not yet recognized. That is more than 20 times the Cloud segment's quarterly revenue. One source put the backlog at over $460 billion at the end of Q1, when it had nearly doubled from the prior quarter.

Pichai said nearly 90% of Fortune 100 companies use Gemini Enterprise. Google's models are processing 22 billion API tokens per minute.

The Gemini app reached 950 million monthly active users, up from roughly 450 million a year earlier and about 750 million in Q4 2025. Daily active users tripled year over year.

Search still pays the bills

Total Alphabet revenue was $119.8 billion, up 24%. That marks the 12th straight quarter of double-digit growth.

Google Search and other revenue was $63.3 billion, up 17%. That is more than half of Alphabet's sales. Cloud is a little over a fifth.

Search revenue hit an all-time high in the quarter, even with rival chatbots drawing attention. Company operating income rose about 30% to $40.8 billion, with operating margin near 34%.

Microsoft's Azure grew 43% in its fiscal fourth quarter, which ended June 30, and now runs at an annualized revenue rate of $100 billion. Google Cloud's growth rate is nearly double that, from a smaller base.

The bill

Alphabet's capital expenditures doubled to $44.9 billion in the quarter. That single quarter's spending is larger than Google Cloud's entire quarterly revenue.

Pichai framed the spending as necessary to build AI infrastructure and meet customer demand. He also said the company would forgo some short-term Cloud revenue to steer compute toward its most advanced models.

That forgone revenue bears directly on the backlog. Customers have signed for $514 billion of future work, and Alphabet is telling them it cannot serve everything at once.

Investor and Alphabet shareholder Alex Sirois wrote in a Yahoo Finance column on Oct. 16 that Wall Street spent the summer worrying about how much Alphabet spends. By his figures, operating cash flow rose 41% to $39 billion, which is less than the quarter's capex. That left free cash flow negative.

Sirois, who says he keeps adding to his Alphabet position, argues the established businesses pay for the new one. He also discounts the headline earnings per share of $9.11, because a $99.03 billion gain on equity securities inflated net income. He tracks operating income instead.

That gain is a reminder that bottom-line profit in the quarter was boosted by investment marks, not just operations.

What the stock is doing

Alphabet's Class C shares (GOOG) closed at $317.28 on Friday, Oct. 23, down 1.08% on the day.

The stock's 52-week range is $264.94 to $404.47. Market capitalization stood at roughly $3.95 trillion.

Sirois says Alphabet shares have returned 39% over the past year. He puts the stock at about 16 times earnings, a figure that rests on his own reading of the results.

The open question

The case for the spending is now a matter of record: Cloud revenue, margin and backlog are all rising together. Alphabet has said the money is going into compute that customers have already contracted to use.

What Alphabet has not said is how long capital spending will exceed operating cash flow. The Cloud segment's $8.8 billion in quarterly operating income also remains well short of the $44.9 billion spent on infrastructure in the same three months. The $514 billion backlog only turns into revenue if Alphabet can build and power the capacity to deliver it.