Google parent Alphabet Q2 earnings beat Wall Street expectations, reaffirming the tech giant's dominance in its ad search and cloud businesses. Alphabet Inc. (GOOG, GOOGL) reported its second quarter figures after the bell Wednesday, recording adjusted earnings per share of $2.31 and TAC-excluded revenue of $81.2 billion.

Analysts had predicted EPS of $2.17 and revenue of $79.6 billion. The firm reported year-earlier second-quarter revenue of $71.3 billion, exhibiting solid year-over-year expansion.

Alphabet shares increased over 3% in premarket trading on Thursday as investors welcomed the news. Although the stock has experienced fairly modest growth of approximately 0.5% in 2025 so far, it exceeded estimates in Q2, whereas the S&P 500 has increased over 8% over the same period.

CEO Sundar Pichai was careful to note that artificial intelligence is fueling Alphabet's momentum. "AI is having a positive impact on every facet of the business, driving strong momentum," he stated.

AI is now ingrained deeply throughout Google's product line—from search to cloud and YouTube—driving double-digit growth in search revenue and improved performance throughout its AI-driven features.

Advertising and Search Surpass Projections

One of the strongest positives in Google parent Alphabet Q2 earnings beat Wall Street expectations was the solid ad performance. Ad revenue came in at $71.3 billion, well above the estimated $69.6 billion. Google's core search business accounted for $54.1 billion, well above estimated $52.7 billion. YouTube ad revenue also came in above estimates at $9.8 billion from estimated $9.5 billion.

Pichai highlighted that new AI-powered features like AI Overviews and AI Mode are fueling engagement and ad performance. The features are helping advertisers reach users more precisely and improve the customer experience.

Backing up the company's leadership position at the top of the digital ad ecosystem was the continued supremacy of YouTube and Google's subscription products.

Cloud Business Sets New Record

The other highlight of Google parent Alphabet Q2 earnings beat Wall Street expectations was the performance of Google Cloud. The cloud unit brought in $13.6 billion in revenue, beating analyst expectations of $13.1 billion. Better still, Google Cloud's revenue run-rate on a yearly basis has now crossed over $50 billion—a level that places it among the largest enterprise cloud providers.

Alphabet's cloud infrastructure and AI-cloud solution investments are finally paying dividends. Alphabet has worked diligently to integrate AI into Google Cloud Platform (GCP), offering advanced machine learning solutions and infrastructure options to developers and businesses.
 

Massive AI Spending Ahead

While the remarkable beat in earnings was welcome, Alphabet Q2 earnings by Google parent also had a warning. The company also raised its capital expenses outlook—up from $75 billion to a whopping $85 billion. That reflects the company's all-out effort to build out its AI infrastructure.

Much of that outlay will be devoted to building out data centers and powering them with a mix of Google's proprietary AI chips and Nvidia graphics processing units.

The AI arms race is fierce, with Alphabet competing with Microsoft, Amazon, and Meta for dominance in the future of artificial intelligence. Alphabet alone will invest more than $75 billion in AI this year, one of the fastest tech infrastructure build-outs in corporate history.

Legal Headwinds Can Rock the Firm

As Google parent Alphabet Q2 earnings show fiscal well-being, outstanding legal troubles loom over it. In a major antitrust development, in a recent decision, U.S. District Court for the District of Columbia Judge Amit Mehta ruled that Google was violating antitrust laws by keeping out competitors from the online search and search ad markets.

Penalties are imminent and may be harsh. Among the options: mandating Google to drop its exclusivity agreements that render Google Search the default on Apple and Android devices. More extreme would be an order to splinter some of the company's divisions—like unbundling the Chrome browser, which controls world- wide web traffic.

Any such action would have a knock-on effect on Google's core business. Search and Chrome are inseparable, and giving up control of the browser would take away from Google's control of maintaining its leadership in digital search advertising.

A Diverse Outlook for Investors

Google parent Alphabet Q2 earnings give investors plenty to be hopeful about. The firm is performing well across all its core businesses, and AI is giving it a good tailwind.

Advertisements keep going up, search remains a cash cow, and cloud is quickly becoming a significant profit center. But increasing capital expenditure and antitrust uncertainty make up a less clean story.

With AI firmly in place at the center of Alphabet's strategy, the long-term future for the company appears bright—if only it can avoid regulatory challenges and maintain its lead in AI and cloud technologies. Alphabet's Q2 figures for the moment indicate a company burning brightly across all cylinders while facing increasing scrutiny and enormous investment in its future.