Alphabet Inc. (GOOGL) 10-Q 2026: AI Summary

Summary

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Alphabet reported Q2 2026 revenues of $119.8B (up 24% YoY) and net income of $112.2B, with diluted EPS of $9.11, as OI&E of $98.0B included $99.0B of net gains on equity securities.

Revenues increased 24% YoY to $119.8B, which management attributes primarily to an increase in Google Services revenues of $12.0B, or 15%, and an increase in Google Cloud revenues of $11.1B, or 82%. Operating income rose 30% YoY to $40.8B and operating margin expanded to 34% from 32%. Net income available to common stockholders increased 298% YoY to $112.1B, and OI&E of $98.0B included net gains on equity securities of $99.0B, primarily related to unrealized gains in the equity securities portfolio from SpaceX and a private company.

Total revenues rose 24% YoY to $119.8B, driven by Google Services revenues up $12.0B (15%) and Google Cloud revenues up $11.1B (82%), per MD&A.
Operating income increased 30% YoY to $40.8B, with operating margin expanding to 34% from 32%.
Net income available to common stockholders was $112.1B, up 298% YoY, and diluted EPS was $9.11 versus $2.31, with OI&E of $98.0B including $99.0B of net gains on equity securities.
Operating cash flow was $39.1B for the quarter and capital expenditures were $44.9B, per MD&A.

Results That Matter

Revenues
Current period
$119.8B
Prior period
$96.4B
Change
+24.2%
Management attributes the increase primarily to an increase in Google Services revenues of $12.0B, or 15%, and an increase in Google Cloud revenues of $11.1B, or 82%.
Income from operations
Current period
$40.8B
Prior period
$31.3B
Change
+30.4%
Operating margin expanded to 34% from 32%.
Net income available to common stockholders
Current period
$112.1B
Prior period
$28.2B
Change
—
OI&E of $98.0B for the three months ended June 30, 2026 included net gains on equity securities of $99.0B, primarily related to unrealized gains in the equity securities portfolio from SpaceX and a private company.
Diluted net income per common share
Current period
$9.1
Prior period
$2.3
Change
+294.4%
The increase reflects the higher net income available to common stockholders, which included net gains on equity securities.

Financial highlights: current period, prior period, change, and investor takeaway per metric
Metric	Current Period	Prior Period	Change	Investor Takeaway
Revenues	$119.8B	$96.4B	+24.2%	Management attributes the increase primarily to an increase in Google Services revenues of $12.0B, or 15%, and an increase in Google Cloud revenues of $11.1B, or 82%.
Income from operations	$40.8B	$31.3B	+30.4%	Operating margin expanded to 34% from 32%.
Net income available to common stockholders	$112.1B	$28.2B	—	OI&E of $98.0B for the three months ended June 30, 2026 included net gains on equity securities of $99.0B, primarily related to unrealized gains in the equity securities portfolio from SpaceX and a private company.
Diluted net income per common share	$9.1	$2.3	+294.4%	The increase reflects the higher net income available to common stockholders, which included net gains on equity securities.

Earnings Quality & Cash Conversion

Net income of $112.2B for the three months ended June 30, 2026 included OI&E of $98.0B, which included net gains on equity securities of $99.0B, primarily related to unrealized gains in the equity securities portfolio from SpaceX and a private company. General and administrative expenses included a $1.5B charge related to a certain legal matter, and accrued interest and costs of $581M related to the same matter were recognized in other income (expense), net. The filing does not define an adjusted or ex-item earnings total.

Red flag

Net income of $112.2B for the quarter included $99.0B of net gains on equity securities recorded in OI&E, which are unrealized and not from operating activities.

Value Drivers & Capital Allocation

“Cash provided by financing activities consists primarily of proceeds from issuance of debt, proceeds from issuance of equity, and proceeds from the sale of interests in consolidated entities. Cash used in financing activities consists primarily of repayments of debt, net payments related to stock-based award activities, and dividend payments.”
— Filing statement

“In June 2026, we issued a combination of Class A stock and Class C stock and mandatory convertible preferred stock for aggregate net proceeds of $49.6 billion, to be used for general corporate purposes, including capital expenditures to scale AI infrastructure and global compute.”
— Filing statement

“During the six months ended June 30, 2025 and 2026, we spent $39.6 billion and $80.6 billion on capital expenditures, respectively.”
— Filing statement

Return on equity was 17.5% (prior 7.8%) (period net income / period-end equity, not annualized); return on assets 12.2% (period net income / period-end assets, not annualized).

Forward Signals

The filing does not provide quantitative revenue or earnings guidance. It states that in 2026 the company expects to significantly increase, relative to 2025, its investment in technical infrastructure, including servers and network equipment and data centers.

Known trends

We expect existing cash, cash equivalents, short-term marketable securities, and cash flows from operations and financing activities to continue to be sufficient to fund our operating activities and cash commitments for investing and financing activities for at least the next 12 months, and thereafter for the foreseeable future.
As more countries enact these global minimum tax rules, our effective tax rate and cash tax payments could be affected.
In the second quarter of 2026, we began recognizing revenues from these agreements, with the significant majority to be recognized in 2027.

Subsequent events

On July 2, 2026, the EC upheld its 2018 decision that certain provisions in Google's Android-related distribution agreements infringed European antitrust laws. The court imposed fine and interest of $5.2 billion, which was previously accrued, was paid in July 2026.
In July 2026, the company's Board of Directors declared a quarterly cash dividend of $12.15 per share on each of our Series A and Series B mandatory convertible preferred stock (equivalent to approximately $0.60 per each of our Series A and Series B Depositary Shares) and a quarterly cash dividend of $0.22 per share on our Class A, Class B, and Class C stock.

Risks

4 source-verified filing excerpts. Selected excerpts are not a complete risk inventory.

Filing excerpt 1

EvidenceIn the second quarter of 2026, we accrued $2.1 billion in legal charges related to a Stockholm Patent and Market Court decision regarding a private action brought against Google by PriceRunner (a subsidiary of Klarna).

Filing excerpt 2

EvidenceAs of June 30, 2026, we had short-term accrued legal and regulatory fines and settlements of $17.4 billion. This amount primarily included EC fines, in addition to accruals related to other legal matters and regulatory fines and settlements.

Filing excerpt 3

EvidenceAs of June 30, 2026, we provided backstops in the form of financial guarantees and credit derivatives with maximum potential amount of future payments of $7.6 billion and $43.8 billion, respectively.

Filing excerpt 4

EvidenceAdditional issuances of our Class A stock or Class C stock under our ATM Program, any conversions of our Mandatory Convertible Preferred Stock to Class A stock or Class C stock and any other future sales or other issuances of our Class A stock or Class C stock could dilute our existing stockholders or otherwise depress the market prices of our Class A stock and Class C stock.

Balance Sheet & Liquidity

Leverage: Identified debt as of 2026-06-30: reported debt balance of unestablished maturity scope of $98.2B. The concept behind this balance does not establish which maturities it covers. Total debt, net debt and debt-to-equity are therefore not stated.

Liquidity: As of June 30, 2026, the company had $242.5B in cash, cash equivalents, and short-term marketable securities, and $11.7B of credit facilities, of which $1.3B was outstanding; the commercial paper program of up to $25.0B had no commercial paper outstanding.

Working capital: Current assets $343.5B vs. current liabilities $126.1B (current ratio 2.72x). Prior reported balance sheet as of 2025-12-31: $206.0B vs. $102.7B (2.01x).

Maturities & covenants

As of June 30, 2026, we had $11.7 billion of credit facilities, expiring at various dates through April 2030, of which $1.3 billion was outstanding.
The outstanding debt under the credit facilities bears an interest rate of SOFR plus 1.5% to 2.25% that is paid quarterly.

Notable Footnotes

Item	Impact
Revenue backlog	As of June 30, 2026, remaining performance obligations were $519.5B, of which $513.9B related to Google Cloud; the company expects to recognize just over 50% as revenues over the next 24 months.
Equity securities gains	Gross unrealized gain on non-marketable equity securities accounted for under the measurement alternative was $77.5B for the three months ended June 30, 2026, and total gain on equity securities in other income (expense), net was $99.0B.
Purchase commitments	As of June 30, 2026, material purchase commitments and other contractual obligations totaled $811.0B, of which $200.7B was short-term, primarily relating to technical infrastructure and inventory through long-term supply agreements and open purchase orders.
Leases not yet commenced	As of June 30, 2026, the company had entered into leases, primarily related to data centers, that have not yet commenced with future lease payments of $85.2B, commencing between 2026 and 2031.

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AI-generated. Informational only, not investment advice. May be incomplete or contain errors. The authoritative source is always the original SEC filing.