Google Cloud revenue growth in Q2 up 82%, nearly hits $100 billion annual run rate

Google Cloud’s second quarter revenue growth accelerated 82% in the second quarter to $24.8 billion. Google Cloud delivered operating income of $8.8 billion in the second quarter.

Alphabet, parent of Google, reported second quarter net income of $112 million, or $9.11 a share, on revenue of $119.8 billion, up 24% from a year ago. Wall Street was looking for non-GAAP earnings of $2.91 a share on revenue of $116.98 billion. Alphabet’s other income in the quarter was $98 billion due to investment gains.

The company raised it capital expenditure guidance to $195 billion to $205 billion, up from the previous estimate of $180 billion to $190 billion.

Google Cloud’s surge in revenue is notable on a few fronts. First, Google Cloud is benefiting from a deal with Anthropic, which is also a frontier model competitor. Alphabet CEO Sundar Pichai said the quarter was “driven by demand for AI infrastructure and AI solutions” and Gemini Enterprise has nearly 90% of the Fortune 100 using it.

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The overhang with Alphabet is that it said it will continue to tap the equity market to raise money through an at-the-market program. Alphabet said it hasn’t sold any share under the program.

By the second quarter numbers:

• Google search revenue was $63.3 billion.
• YouTube ad revenue was $11.05 billion, up 13% from a year ago.
• Google’s “other bets” revenue was $382 million, up slightly from a year ago.
• Google services operating income was $39.54 billion.
• Gemini served about 22 billion tokens per minute, up from 16 billion in the first quarter.
• Gemini’s app had 950 million monthly active users.
• Alphabet spent $44.9 billion on capital expenditures in the second quarter.
• Free cash flow was negative in the second quarter.

Here's what Pichai had to say on the earnings call:

Gemini is a core platform with strong developer and enterprise traction. "More than 9 million developers are building each month with our models across our APIs and key developer products," said Pichai, who also noted Gemini 4 was on deck.

Google is broadening its AI footprint. Pichai said:

• "This quarter we launched Omni. It allows users to create anything from any input, starting with video. Since launching at I/O in May, there's been a 40% increase in daily active users creating videos on the Gemini app."
• "Our Gemma family of open models, small enough to run on local devices, are hugely popular. These models have been downloaded over 900 million times, and our latest Gemma 4 models have been downloaded over 300 million times since launching in April."
• "Our agentic development platform, Antigravity, allows anyone to build in the agent first era. It has more than 2.4 million weekly active users."

AI mode is driving search queries slightly and Pichai aimed to address publisher concerns. "Just like AI Overviews, AI Mode is driving an incremental increase in search queries overall. And we are now sending billions of clicks to websites every week through AI features in search."

Google Cloud goes deeper. Pichai said:

• "We are deepening our relationships with existing customers who are expanding their usage and exceeding their commitments by more than 50 percent, also an acceleration over last quarter. We are driving growth with partners, with transactions on Google Cloud Marketplace growing over seven times year over year."
• "Nearly 500 cloud customers have each processed more than 1 trillion tokens in the last year. Over the last 12 months, more than 2,000 enterprises consumed over 100 billion tokens."