GOOG News
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Mark to Market (revalue)
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GOOG surpass my earnings 2.83. They didn’t revalue space x. 35 billion net income . Will spend 180b on capex. That’s big. But what we all need to understand, they sold the capacity. Just like msft. It’s an iron clad contractual ‘binding UN resolution’ tropic thunder’ type deal. Good news to reverse the red. Cloud up 48%. More tomorrow but a great result.
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A brilliant result with +30% earnings from-a company this size can print gains like this. The big take away is tehehuge Capex spending-and where is this money going(who gets most of it?).
I trust the CEOs and Sundar is best placed over Dave on the internet insofar as where's a good place to be investing GOOG cash. Again he said on the call-they are constrained and they are making a lot of money from AI.
What we saw today were the extreme PE stocks, Palantir, APP, AMD get a good kicking and they dragged everything else down with it-and after hours the quality came back hard. And what you find is any stocks that have risen very fast will also fall very fast in these scenarios (Parabolic effect) but quality, as I said comes back. the dross does not!
There is a lot of noise/FUD around capital spending on GPUs etc and I have to say it's more an opportunity than a risk. A lot push/pull going on, media influence and weak hands. As always patience and staying the course.
Chief Financial Officer (CFO)
CapEx guidance (most important takeaway)
2026 capital expenditure expected at $175bn–$185bn, a sharp step-up.
Spend will be heavily front-loaded into:
Data centres
Custom silicon
AI compute and networking infrastructure
Cost discipline & margins
CFO acknowledged CapEx intensity but stressed:
Operating margins remain structurally stable (~32%)
AI infrastructure investments are already driving Cloud profitabilityBalance sheet
Highlighted $24.8bn in net debt issuance in late 2025 as deliberate liquidity positioning ahead of peak investment years.
Dividend maintained at $0.21 per share, signalling confidence despite elevated CapEx.
Bottom Line
Alphabet is spending aggressively, especially on AI infrastructure.
Management is not pretending CapEx will normalise soon — 2026 is a heavy year by design.
The tone from both CEO and CFO was confident, almost blunt:
short-term cash intensity is the price of long-term dominance.
Elevated CapEx
Stable margins
Cloud and AI doing the heavy lifting on incremental returns -
Of the $180B 2026 Capex, $110B will do towards racks scale build out, split roughly 50/50 GooG/GCP. I would estimate the following recipients of this cash pile. The clear winners being NVDA/AVGO
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Googles own roadmap, clearly showing MORE memory utilisation in successive TPU designs. Wasn't TurboQuant going to wipe it out
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CEO Sundar Pichai framed the quarter as AI-led across the portfolio, saying, "It's clear that our AI investments and full stack approach are driving performance across our business," and added that in Search, "AI continues to drive search usage and queries are at an all-time high."
Pichai highlighted cloud demand and commitments, stating, "Cloud accelerated again this quarter due to strong demand for our AI products and infrastructure," including that revenue "grew 63%, exceeding $20 billion for the first time" and that "our backlog nearly doubled quarter-on-quarter to over $460 billion." NB- new business contracts during the quarter +> $230B!
On product and model momentum, Pichai said, "Overall, the number of paid subscriptions has now reached 350 million," and added, "Our first-party models now process more than 16 billion tokens per minute via direct API use by our customers, up from 10 billion last quarter." +60% QoQ growth
Capex raised +$10B to 180-190B in 2026 and 'our 2027 Capex will increase significantly over this.
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And some say AI isn't being monetised
Anthropic has reportedly agreed to spend around $200 billion over five years on cloud infrastructure and AI chips from Google, highlighting the intensifying race for computing power in the artificial intelligence sector. According to the report, this deal would position Anthropic as one of the largest customers of Google Cloud, potentially representing more than 40% of its revenue backlog.
The scale of this commitment reflects rapidly growing demand for high-performance computing, driven by the expansion of Anthropic’s Claude AI models and increasing enterprise adoption of generative AI tools.
Businesses are relying more heavily on such systems for automation, analytics and customer-facing applications, which in turn requires vast processing capacity.
The agreement, signed in April, also includes access to advanced tensor processing units, with contributions from partners such as Broadcom.Deployment is expected to begin around 2027, signalling long-term strategic investment in AI infrastructure.
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Reporting tonight. I think it will be a record:
Consensus: ~$117B revenue and ~$2.88 EPS.
I expect: ~$120B revenue and ~$3.10 EPS.
I expect Google Cloud growth of 65–70%.
AI capex. I expect another increase. Something north of $100B annualised, $25B next Q+.
I expect HBM memory to get a shout outNet Income from operations circa $37B +$20B unrealised gain from investments.
NB- The above is operational. In addition they will likely report a circa $20B gain on SpaceX mark to marketThe headline might state $5 ish-if it does that include the revaluation of the SpaceX holding.
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Estimated growth in Google Cloud Platform (GCP). This is a 30% boost to company wide earnings. If this proves correct-it's huge and there is no denying how impressive the actual growth has been. A 4X increase in growth run rate.
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And, as usual, there's a chunky dip in GOOG share price immediately after good results.
I think I'm learning something about this game in that I come to expect this, but still don't understand why it happens. Is anyone able to explain this (using small words)? Thanks!
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And, as usual, there's a chunky dip in GOOG share price immediately after good results.
I think I'm learning something about this game in that I come to expect this, but still don't understand why it happens. Is anyone able to explain this (using small words)? Thanks!
@2BToo two words: Retail Investors (in my small mind anyhow)
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Because the market is obsessed with capex spending. GOOG is spending ALL their money and more(borrowing+capital raising) to fund their AI aspirations. They are generating record earnings, have a massive backlog and clear blue-sky ahead as evidenced in the above post. They have $514 billion in outstanding contracts to supply compute-what are they expected to do. Turn the business down? Of course they need to perform on those contracts and to do so they need to spend a lot of money to build the capacity to service these customers.
If the market doesn't like it 'today' they will, imo, wish they had, 'tomorrow'
NB-and despite the backlog being staggeringly huge, they are expected to add another $250B in the near term whilst delivering on that RPO in the 100B+ range at least over the same period.
As we have discussed previously, based on what Nvidia and TSMC and MU (10s of large companies) are saying(and doing). The AI factory build out will take another 5-8 years and then need maintaining. I've posted many slides showing 2027 is 50% over 2026 capex spending. It's accelerating. If stockholders don't like it, don't buy the stock only to be surprised when they spend more. It's happening. The companies are being completely transparent so it beggars belief that it surprises anyone.
The entire global supply chain is firing on all cylinders and has been for 18 months. And in the back ground are the FUD peddlers, pumping out articles to manipulate the naive into thinking it has peaked, it makes no money, Nvidia have chip problems, China is coming blah blah. It's all nonsense.
Anyone remember the 'Dean of valuation-the prof' 3 years ago he said Nvidia was worth $4 when the stock was trading at $24 and all the evidence suggested it was going higher. How many people did he induce to sell.
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And, as usual, there's a chunky dip in GOOG share price immediately after good results.
I think I'm learning something about this game in that I come to expect this, but still don't understand why it happens. Is anyone able to explain this (using small words)? Thanks!
And, as usual, there's a chunky dip in GOOG share price immediately after good results.
I think I'm learning something about this game in that I come to expect this, but still don't understand why it happens. Is anyone able to explain this (using small words)? Thanks!
I’ve probably mentioned before, but I spent over 20 years with a ‘unicorn’ US company….& it never failed to perplex me how we could have a stunning quarter and the. watch the share price immediately dip, or a poor to average one & see things rise 🤪
No logic!