What to expect from Alphabet's Q2 earnings: AI, Gemini and cloud in focus

Alphabet Inc. GOOGL will report second-quarter earnings on Wednesday after the closing bell, with investors closely watching whether the Google parent can justify its growing investments in artificial intelligence amid delays to a key AI model and intensifying competition.

As the first of the "Magnificent Seven" technology companies to report earnings this season, Alphabet's results are expected to provide an early indication of demand for AI infrastructure and whether large capital investments are translating into business growth.

While the company's cloud business has remained a key growth driver, recent delays to its Gemini 3.5 Pro model have added to investor concerns about Alphabet's competitive position in the AI race.

What Wall Street expects from Alphabet's Q2 earnings

According to LSEG data, Alphabet is expected to report second-quarter revenue of $116.93 billion, representing year-over-year growth of 21.3%.

Cloud revenue is expected to maintain growth of about 64%, while advertising revenue is forecast to increase 13.7%.

Benzinga Pro estimates second-quarter revenue at $113.6 billion and earnings per share of $2.87, compared with revenue of $96.4 billion and EPS of $2.31 in the same period last year.

Analysts also expect Google Cloud revenue to continue expanding rapidly, with Zacks estimating sales of $22.79 billion, up from $13.62 billion a year earlier.

Gemini delay raises questions over AI strategy

Alphabet delayed the launch of Gemini 3.5 Pro from June.

The flagship model is designed to strengthen the company's position in AI coding tools and agentic AI applications, two of the fastest-growing areas of the artificial intelligence market.

The delay comes as Chinese open-source AI models continue to compete more aggressively with leading US developers and as investors increasingly question whether large technology companies are generating sufficient returns from heavy AI spending.

Dave Wagner, portfolio manager at Aptus Capital Advisors, said in a Reuters report, "While Google is missing the boat on AI coding and that's a very real growing concern ... Google's strategy is all about the ecosystem."

Guggenheim analyst Michael Morris maintained a Buy rating and a $450 price target on Alphabet ahead of the earnings release.

"Competitive noise creates attractive entry for full-stack AI leader," Morris said.

Freedom Capital Markets Chief Market Strategist Jay Woods also pointed to the Gemini delay as an important issue heading into earnings, saying investors will be looking for updates on the company's AI strategy.

"Watch for updates on Gemini and if the company’s massive AI spending continues," Woods said. "With billions being poured into chips, data centers, and Gemini development, Wall Street wants evidence that AI is driving growth rather than simply driving expenses."

Cloud growth and AI investments remain key focus

Alphabet raised its 2026 capital expenditure guidance in April to between $180 billion and $190 billion.

The company has also announced plans to raise approximately $85 billion through equity offerings, including an investment from Berkshire Hathaway.

The company's cloud business continues to benefit from demand for AI infrastructure and custom AI chips, including multi-billion-dollar agreements with Meta Platforms and Anthropic.

Beyond the headline financial results, investors are expected to focus on Google Search advertising, YouTube advertising, Google Cloud performance, operating margins and capital expenditure plans.

Management commentary on Gemini, AI monetization and infrastructure investments will also be closely monitored as investors assess whether Alphabet's AI strategy is strengthening its broader business ecosystem.

Alphabet shares have declined about 9% since late April despite reporting a 63% increase in cloud sales during the previous quarter.

However, the stock remains nearly 13% higher for the year, making it the second-best performer among the Magnificent Seven group.