23 July 2026
If you are covering Alphabet’s latest financial results, please find below a comment from Ben Barringer, head of technology research at Quilter Cheviot:
A mixed set of results from Alphabet, with the headline numbers undeniably impressive but some reasons for caution beneath the surface. Revenue growth of 24% was just ahead of expectations, driven by a phenomenal 82% increase in Google Cloud revenues, significantly outperforming market forecasts and taking the cloud backlog to an extraordinary $514 billion. YouTube also delivered a solid 13% increase in advertising revenues, helped in part by engagement around the FIFA World Cup, and ahead of consensus expectations.
However, investors appear focused on the cost of sustaining that growth as management increased capital expenditure guidance by a further $15 billion to a range of $195 billion to $205 billion, underlining just how capital-intensive the AI race has become. While demand remains exceptionally strong, Google also flagged ongoing licensing capacity constraints and a softer margin outlook as it continues to scale infrastructure.
There are also questions around Gemini. Despite approaching a billion monthly active users, the platform has yet to demonstrate the sort of clear step-change advantage that would decisively differentiate it from competing AI models. At the same time, comments around equity issuance and the need for ever-higher investment raise questions about the long-term returns from this spending cycle.
Overall, the quarter reinforced Google's enormous AI opportunity, particularly in cloud, but it also highlighted the growing cost of competing at the frontier.
