Google Cloud was a small but mighty contributor to Alphabet’s Q2 earnings
In sum – what to know:
AI paying off – Google Cloud is still a relatively small portion of Alphabet’s overall business. But it is seeing particularly strong growth, driven by AI, and the company is seeing demand across segments for AI-enhanced services.
More big deals – The number of $250 million and $1 billion deals that the company is making have increased year-over-year.
CapEx up – Alphabet raised its capex guidance for the year by $10 billion.
Alphabet delivered strong second quarter results, with Google Cloud seeing more than 30% revenue growth year-on-year as the company benefits from soaring demand for AI infrastructure and services. That demand means that the company plans to spend an additional $10 billion on infrastructure this year.
Alphabet delivered consolidated revenues of $96.4 billion for the quarter, up 14% year-on-year or 13% when currency impacts were accounted for. Google Services accounted for $83 billion of that, with 12% growth. Google Cloud, meanwhile, saw its revenues jump 32% compared to the same time last year, to $13.6 billion. Google Cloud’s backlog was up 38% year-over-year and now exceeds $100 billion.
“AI is positively impacting every part of the business, driving strong momentum,” said CEO Sundar Pichai during the quarterly call.
The company invested $22.4 billion in capital expenditures during the quarter, with most of it going to infrastructure. Servers accounted for two-thirds of infrastructure investment, and the other one-third went to data centers and networking equipment. And Alphabet is going to spend even more this year on capex than it had previously planned, raising guidance from an estimated $75 billion to $85 billion.
“While we have been working hard to increase capacity and have improved the pace of server deployment, we expect to remain in a tight demand supply environment going into 2026,” said CFO Anat Ashkenazi on the call, reflecting an industry-wide supply pinch.
The company’s search segment also saw growth, and Pichai highlighted the AI aspect of that business as well. He said that Google’s AI Overviews feature now has over 2 billion monthly users around the world. He also said that AI features “cause users to search more, as they learn that search can meet more of their needs.” The types of queries which have AI Overviews are associated with a 10% boost in query volumes, he added.
Overall, Pichai credited Alphabet’s strong market position to its extensive AI infrastructure, AI research (including its models and tools) and the implementation of AI across Google tools and platforms.
He also pointed out several stats that illustrated the demand for Google Cloud Platform (GCP) services.
–GCP is signing more large deals. Deals valued at more than $250 million doubled year-over-year in the first half of 2025, Pichai said. And during that same period, Alphabet signed the same number of $1 billion+ deals that it did during the whole of 2024.
–Its customer base is growing rapidly. The number of new GCP customers was up nearly 30% just from the first quarter to the second quarter of this year, Pichai said.
–Enterprises are using its AI tools. Pichai said that more than 85,000 enterprises, including giants like Salesforce, are now using its Gemini AI software.
Alphabet executives also offered some additional examples of how Google Cloud customers are using its AI capabilities. Wayfair, Pichai said, is “leveraging our databases integrated with AI to streamline data pipelines and deliver more personalized customer experiences. … Target is using our Gemini-powered threat intelligence and security operations agents to improve cybersecurity.” Chief Business Officer Philipp Schindler mentioned that PayPal is expanding its Google Cloud adoption for “AI-driven recommendations, transaction processing, and enhanced security.”
At Google Cloud Next earlier this year, the company had announced Agentspace, a platform to enable businesses to build their own AI agents. Pichai said that more than a million subscriptions are already on the books for Agentspace, which is not yet generally available.
