• by Laurie Sullivan , Yesterday

Alphabet, Google's parent, reported that 2026 second-quarter earnings rose 24% to $119.8 billion compared with the prior quarter.

This is the twelfth consecutive quarter that the company has recorded double-digit growth.

Revenue for its Google Services rose 15% to $94.5 billion, led by 17% growth in Google Search & other, 15% in Google subscriptions, platforms, and devices, and 13% in YouTube ads.

Google Cloud revenue increased 82% to $24.8 billion, led by an increase in Google Cloud Platform (GCP) across enterprise AI Solutions and enterprise AI Infrastructure, as well as core GCP services.

“Our AI investments are redefining what’s possible across every part of our business,” stated Sundar Pichai, CEO of Google and Alphabet. “It’s great to see wide adoption of Gemini Enterprise, with nearly 90% of the Fortune 100 using it.”

He also noted that AI features drive Search query growth, with Gemini models now processing 22 billion API tokens per minute. The Gemini App has 950 million monthly active users.

Capital spending on artificial intelligence (AI) is projected to skyrocket in 2026 as companies pour billions into new data centers and invest in silicon chips to compete.

Massive investments have begun to raise questions on the stability of spending funds based on forecasts for long-term demand.

In April, Google raised its expected capital expenditure spending for the year to as much as $190 billion. The company says that amount is expected to increase further in 2027, the Financial Times reported.

Today, Alphabet said its capital expenditures reached about $45 billion, offset by $39 billion in cash from operating activities. 

Chief Financial Officer Anat Ashkenazi told analysts the company’s “free cash flow will remain under pressure.” She also raised Google’s projection for capex to between $195 billion and $205 billion for 2026, up from between $180 billion and $190 billion.

This week, Google released three less expensive Gemini models, including one intended to reduce concerns over cybersecurity.

But Google faces additional challenges. Reddit's $60 million annual deal struck in 2024, which allows Google to use its content to train AI models, will end in early 2027 unless the two companies can come to an understanding over how and why the data can be used, according to multiple reports. 

Through its online message board, Reddit provides the majority of information to Google search results -- both traditional and AI for training purposes -- but reports suggest the company is considering shutting off the flow of information for use in Google's AI engines, The Wall Street Journal reported on Wednesday, citing people familiar with the matter.

Google receives an automated, real-time firehose of public Reddit posts, comments and subreddits through a Data API. It applies the data to train its large language models (LLMs) and to serve the information in AI Overviews.

Many online publishers have expressed frustration, indicating that Google has upended their revenue model as AI changes the way people ask questions and information is fed back to them.

Publishers are also losing revenue with a concept called "zero-click" -- a growing trend where search engines resolve a user's query directly on the results page using AI-generated summaries or featured snippets, eliminating the need for a website visit.

USA Today, Politico, the Economist, People. and Reuters are evaluating how -- or even whether -- they will continue to work with Google, the WSJ reported.