Alphabet Inc. posted 24% year-over-year revenue growth in the second quarter, driven by its surging cloud business, yet investor concerns over escalating artificial intelligence infrastructure costs tempered the reaction.
The Google parent reported $119.8 billion in total revenue for the April-June period, beating analyst expectations. Its cloud segment generated $24.8 billion, while search delivered $63.3 billion.
Net income reached $112.1 billion, also ahead of forecasts, boosted largely by gains in Alphabet’s equity investments.
However, the company raised its full-year capital expenditure guidance by $15 billion to a new range of $195 billion to $205 billion as it accelerates AI build-out. Free cash flow turned negative in the quarter and will stay under pressure, Chief Financial Officer Anat Ashkenazi said, citing heavy investments in technological infrastructure.
Alphabet has been racing to catch up in generative AI. It launched the competitive Gemini 3 model in November but has since lagged behind rivals OpenAI and Anthropic on the frontier.
“There are many areas where we are still at the frontier,” CEO Sundar Pichai told analysts. “There are areas where we need to improve.”
The cloud business continues to provide a major lift. Its backlog grew to a record $514 billion in the quarter, up from $460 billion previously.
To fund data center expansion, Alphabet announced an $85 billion equity raise last month. It spent $44.9 billion on capital expenditures in Q2 and now projects up to $190 billion for the full year, mostly for AI initiatives.