谷歌Q2云业务再超预期，但自由现金流转负引发估值重估

Original Author: SoSo Value

Alphabet released its Q2 2026 results: Revenue, cloud computing, and advertising businesses generally exceeded expectations, with Google Cloud's growth rate once again surpassing even the most bullish buyer forecasts. The company simultaneously raised its full-year capital expenditure guidance and anticipates a significant increase in investment in 2027, providing support to the AI chip, server, storage, and data center supply chain.

However, the rapid growth in capital expenditure drove free cash flow negative, and EPS excluding investment gains fell short of expectations. Management acknowledged that Gemini's coding capabilities still need improvement but did not provide a clear timeline for catching up or verifiable quantitative targets. Cloud backlog orders continued to grow, but the sequential growth rate slowed notably. Alphabet's stock fell approximately 3% in after-hours trading.

Q2 Results: Revenue Beat Expectations, Core EPS Slightly Missed

Q2 revenue reached $119.8 billion, a 24% year-over-year increase, beating the consensus estimate of $116.96 billion.

Net profit surged 297.6% year-over-year to $112.1 billion, with EPS of $9.11. Unrealized net gains from the appreciation of equity investments contributed $77.1 billion to net profit. Excluding other gains, EPS was approximately $2.85, below the consensus estimate of $2.95.

Therefore, the significant increase in net profit and GAAP EPS was primarily driven by investment gains. Core business performance is better assessed through operating profit, cloud business growth, and cash flow.

Cloud Business Exceeds Most Optimistic Expectations, Backlog Growth Slows

Google Cloud revenue was $24.77 billion, a 81.8% year-over-year increase, accelerating further from Q1's 63.4% and significantly beating the consensus estimate of 64.3% and the buyer-side optimistic forecast of 75%.

Cloud backlog orders grew 11.7% quarter-over-quarter to $514 billion, an increase of approximately $54 billion in the single quarter, primarily driven by enterprise AI product demand and TPU orders. Over half is expected to be recognized as revenue within the next 24 months. However, the incremental backlog has notably slowed compared to prior periods. Whether Cloud can maintain its current growth rate will depend on new contract sizes, computing power delivery speed, and the pace of TPU revenue recognition.

Gemini Enterprise has become a significant growth driver for Cloud, with nearly 90% of Fortune 100 companies using it. Customer model invocation volume via the API has risen to over 22 billion tokens per minute, a 37.5% increase from last quarter's 16 billion, indicating continued rapid expansion in enterprise AI demand.

Advertising business broadly met expectations:

· Total advertising revenue was $81.63 billion, up 14.4% year-over-year, slightly above the market forecast of $81.1 billion.

· Search revenue was $63.27 billion, up 16.8% year-over-year, largely in line with the market expectation of $63.3 billion, but the growth rate slowed from Q1's 19.1%.

· YouTube advertising revenue was $11.06 billion, up 12.9% year-over-year, exceeding the forecast of $10.8 billion.

· Google Network revenue was $7.3 billion, down 0.7% year-over-year, still slightly above the $7.13 billion forecast.

Capex Raised Again, Free Cash Flow Turns Negative

Q2 capital expenditure reached $44.92 billion, up 100.5% year-over-year and 25.9% quarter-over-quarter. The company raised its 2026 capital expenditure guidance from $180 billion-$190 billion to $195 billion-$205 billion, increasing both the lower and upper ends by $15 billion, and expects capital expenditure to continue growing significantly in 2027.

The continuously increasing investment reflects that Google Cloud, Gemini training, and TPU demand remain constrained by computing power supply, providing medium to long-term demand support for AI accelerators, storage, servers, optical communications, and data center construction.

The corresponding cost is already reflected in cash flow. Q2 free cash flow dropped from $10.12 billion in the previous quarter to negative $5.86 billion, marking the first time capital expenditure exceeded operating cash flow. As depreciation, energy, and data center operational costs gradually flow into the income statement, market valuation of Alphabet will increasingly depend on the revenue conversion speed and return on capital from AI investments.

Earnings Call: Computing Power Tightness Persists, Gemini 4 Still Needs to Prove Competitiveness

Management stated that the company still faces a severe shortage of computing power. In Q3, it will temporarily expand third-party computing power rental to avoid losing large customers due to short-term capacity constraints. Third-party computing power costs are higher, which is expected to put some pressure on Cloud margins but helps preserve the value of long-term contracts.

This quarter, Google delivered TPU systems to customers and recognized revenue for the first time. Only a small amount of revenue will be recognized in 2026, while the vast majority of revenue from existing TPU contracts will be recognized in 2027. The expansion of TPU from internal infrastructure to external systems increases Google Cloud's total addressable market and improves visibility into demand for upstream advanced processes, HBM, servers, and networking equipment.

Regarding models, Google has initiated the largest pre-training run for Gemini 4, aiming to regain a leading position in the next generation of frontier models. Management also acknowledged that the current model's coding and agent programming capabilities still need improvement. As no clear release date, performance data, or commercialization path for Gemini 4 has been announced, the earnings call did not fully alleviate market concerns about Google's model competitiveness.

This earnings report proves that enterprise AI demand remains strong and that Google Cloud is accelerating the monetization of its AI investments. The after-hours decline reflects that the market's evaluation criteria have further intensified: cloud revenue exceeding expectations remains positive, but negative free cash flow, continuously expanding capital expenditure, and uncertainty surrounding Gemini's frontier capabilities will collectively determine Alphabet's valuation range in the next phase.