The company reported a 24-percent surge in revenue for its second quarter, one day after unveiling a significant update to its Gemini Flash model portfolio.
Google parent company Alphabet reported continued momentum in its 2026 second quarter—the company’s 12th consecutive quarter of double-digit growth—driven by the company’s AI technology in general and specifically its Gemini models.
The financial results, for Alphabet’s Q2 ended June 30, come a day after Google updated its AI model lineup, launching Gemini 3.6 Flash, 3.5 Flash-Lite and 3.5 Flash Cyber.
During the company’s quarterly earnings call with financial analysts Wednesday afternoon, Alphabet and Google CEO Sundar Pichai (pictured) said Alphabet’s AI products, while themselves a profitable and growing line of business for the company, is also a major driver of many other aspects of Alphabet’s operations including its software product stack, its cloud services, its cybersecurity and data analytics products, and its IT infrastructure offerings.
“Our AI investments are redefining what’s possible across every part of our business,” Pichai said, pointing to the use of AI within Google’s search and cloud computing businesses as examples.
“We saw 17 percent [year-over-year] revenue growth in search and YouTube ads [revenue] grew 13 percent,” the CEO said. “Cloud revenue grew 82 percent [year-over-year], powered by strong demand for AI infrastructure and AI solutions, and cloud backlog grew to $514 billion.”
The growth comes at a time when Google Cloud is investing in its partners as they seek to expand globally.
Pichai said the company’s “global product footprint…brings AI to more people than any other company.” In the case of Google’s search services, “AI continues to drive an expansionary moment with new experiences resonating with users and driving growth in queries.” He noted that monthly users of Google Search AI Mode now exceed 1 billion since it was made globally available last October.
This week Google introduced three new models: Gemini 3.6 Flash, 3.5 Flash-Lite, and 3.5 Flash Cyber, for building AI agents at scale. Google said the new models meet the demands of developers and customers building production AI agents that need higher token efficiency, lower latency, and more reliable performance, according to the company.
Google is also testing Gemini 3.5 Pro with partners and “plan to make it broadly available as soon as it’s ready,” the company said in the announcement, and is already at work on Gemini 4.
Google’s model momentum and its position in the highly competitive AI model space was the focus for much of the Q2 earnings call.
“I think, you know, the frontier is incredibly dynamic space and it’s fiercely moving forward. At any given moment, when you take a snapshot, it feels dynamic,” CEO Pichai said. “We have, clearly, frontier models. There are many areas on which we are still at the frontier. There are areas where we acknowledge we need to improve—coding and agent decoding is an example of that—and I think the teams are very very focused on it with 3.6 flash. Flash is our workhorse model and we see tremendous demand for it, given it generally hits a sweet spot of performance, cost, reliability, latency, et cetera.”
“Gemini 3.5 Pro is currently in testing, and our team is already building the next generation of models,” CEO Pichai said. “We have started our most ambitious pre-training run yet for Gemini 4 and are excited by the progress we are seeing at the frontier.
“Demand for our models is translating to strong token usage across developers and enterprise customers,” he said, noting that the Gemini application now has 950 million monthly active users.
And he said Gemini is a major driver of the growth of the company’s cloud business. Google Cloud revenue in Q2 increased 82 percent year-over-year to $24.8 billion, led by an increase in Google Cloud Platform usage across enterprise AI solutions and enterprise AI infrastructure, as well as core GCP services.
Google Services revenue grew 15 percent to $94.5 billion, led by 17 percent growth in Google Search, 15 percent growth in Google subscriptions, platforms and devices, and 13 percent growth in YouTube ads. (YouTube also got a boost from viewership gains through the company’s partnership with FIFA and the just-concluded World Cup games.)
“Gemini continues to be a key driver of growth and is deeply integrated across all of our cloud products, including Gemini Enterprise, data analytics, cybersecurity, and Google Workspace,” Pichai said. “We are seeing strong, diversified demand across products, customers, geographies, and industries.
“Gemini is transforming how millions of businesses use AI to build custom agents, automate processes, improve cybersecurity, manage customer relationships, data analytics, collaborate effectively, and more,” the CEO said.
A Closer Look At The Numbers
Alphabet’s consolidated revenue for the quarter increased 24 percent (23 percent in constant currency) to $119.8 billion from $96.4 billion in the same quarter one year earlier.
The company said the revenue growth reflected “strong performance” across the business and was the company’s 12th consecutive quarter of double-digit revenue growth.
Operating income for the quarter was $40.8 billion, up more than 30 percent from $31.3 billion one year ago.
Reported net income of $112.1 billion for the quarter, up from $28.2 billion in the second quarter of 2025, included a net gain of $98.0 billion—primarily the result of net unrealized gains on the company’s equity securities.
CFO Anat Ashkenazi said Google continues to build out its data center capacity to meet the rapid growth in demand for its services. While the company takes a “long-term, multi-year view” with those efforts, for the immediate future Alphabet will continue to enlist help from third-party service providers for capacity—and that will put some pressure on profit margins.
And the company’s R&D expenses were up 32 percent in the quarter, driven, in part, due to “compensation from investments in AI talent,” Ashkenazi said.
“As we previously shared, we continue to expect our capex to increase significantly in 2027 and will provide more details at a later date,” the CFO said. “In terms of expenses, the significant increase in our investments in technical infrastructure will continue to put pressure on the P&L in the form of higher depreciation expense and related data center operation costs such as energy. We also expect to continue in key investment areas such as AI and cloud, and we are investing in marketing to support our AI products.
“We expect the free cash flow will remain under pressure, driven by our investments in technical infrastructure, which enables us to capitalize on the AI opportunity and continue to drive attractive returns,” Ashkenazi said.
