Alphabet nearly doubles AI infrastructure spending as Q2 tops estimates

Investing.com -- Alphabet nearly doubled capital expenditure in the second quarter as the Google parent accelerated investments in artificial intelligence infrastructure, while reporting revenue and profit that comfortably beat Wall Street expectations.

The company spent $44.9 billion on property and equipment during the quarter, up from $22.4 billion a year earlier, reflecting its continued buildout of AI infrastructure and global computing capacity. It also raised $49.6 billion through an equity offering, saying the proceeds would support capital expenditures and other corporate purposes.

Chief Executive Sundar Pichai said AI investments are driving growth across the business, highlighting broad enterprise adoption of Gemini and increasing usage across Search, Cloud and YouTube. Nearly 90% of Fortune 100 companies now use Gemini Enterprise, while Gemini models process 22 billion API tokens per minute and the Gemini app has 950 million monthly active users.

Alphabet reported second-quarter earnings per share of $9.11, well above analysts’ estimate of $2.88, while revenue rose 24% year over year to $119.8 billion, topping the consensus forecast of $116.52 billion. Operating income increased 30% and the operating margin expanded to 34%.

The strong performance was driven by Google Cloud, where revenue surged 82% to $24.8 billion as enterprises increased spending on AI infrastructure, AI solutions and core cloud services. Google Services revenue climbed 15%, supported by growth in Search, YouTube advertising, and subscription businesses.

The results underscore how Alphabet’s aggressive spending on AI infrastructure is translating into faster cloud growth and strengthening its core advertising business, as the company races to meet surging enterprise demand for generative AI while fending off intensifying competition from Microsoft, Amazon and other AI rivals.

The Google parent reported a 24% increase in second-quarter revenue to $119.8 billion, marking its 12th straight quarter of double-digit revenue growth. Operating income rose 30%, while operating margin expanded to 34%.

This is a developing story, please check back for updates

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