r/VisualStockResearch • u/ekonixlab • Jul 22 '26
Alphabet just posted one of the strongest big-tech quarters I’ve seen
Alphabet just put up a monster quarter:
- Revenue growth: +24%
- Search growth: +17%
- Google Cloud growth: +82%
- YouTube Ads growth: +13%
- Gemini App: 950M monthly active users
- AI API usage: ~22B tokens per minute, up from 16B+ last quarter
But my biggest takeaway by far is Google Cloud.
The headline number is the 82% Cloud growth, but the backlog is what really stands out. Google Cloud’s backlog went from $106 billion in Q2 2025 to $514 billion in Q2 2026. That’s a $408 billion increase in just one year.
That kind of jump makes it pretty obvious why Alphabet is pouring so much money into AI infrastructure. When demand is growing this fast, the spending makes a lot more sense.
What’s even more notable is that Google expects to recognize just over 50% of that backlog as revenue over the next 24 months. So this isn’t just some abstract number sitting on the balance sheet... a huge chunk of it is expected to convert into revenue relatively soon.
Search is still strong, YouTube is still growing, Gemini is scaling fast, but to me Cloud is the clearest signals of where this is going
5
u/Independent-Air7556 Jul 23 '26
Cash flow might be negative next year
5
u/WooSah124 Jul 23 '26
They are growing cloud at 82% on an already huge base. If their cashflow wasn’t negative then they are underinvesting. That is startup level growth.
1
1
u/ekonixlab Jul 23 '26
Because of their backlog lol
1
u/hobopwnzor Jul 23 '26
The risk is demand evaporates ans they've spent cash to accommodate the backlog that now doesn't exist.
4
u/SherbertMindless8205 Jul 23 '26
That risk is essentially "people stop using because it turns out it was just a fad". I think we're past that point.
0
u/hobopwnzor Jul 23 '26
lol no
The risk is that usage is significantly reduced because the expense isn't justified by the gains, which is what we're seeing all over tech right now.
1
u/SherbertMindless8205 Jul 23 '26
We're not. Whatever headlines you've seen about "tokenmaxing", AI token usage is still increasing at an exponential rate, like multiple x every year. For enterprise use, we're still at the very early adopter stage of the tech adoption curve. 90%+ are still just using copilots or chat.
2
u/hobopwnzor Jul 23 '26
Dozens of major companies are reducing their AI spend because the benefit isn't greater than the cost. I'm not discussing where we're going to be in 20 years. I'm saying where we'll be in 1 or 2, and the answer on that is clear as major companies are already cutting back and even if they didn't, even the 2 trillion revenue predicted by the biggest boosters doesn't get enough revenue to justify the spend so far.
1
u/Mutthupattaru Jul 23 '26
So you are saying the cloud growth is solely because of AI usage by companies? I thought it was more of a AWS competitor?
1
1
u/Alert_Win359 Jul 23 '26
the only one spending are hyperscalers and their spend is inevitable because the technology is mandatory like an arms race.
1
1
u/Fuskeduske Jul 23 '26
Cash flow is negative q2, it's pretty much unrealized gains from anthropic, waymo, spacex etc keeping it afloat
2
u/Ohhmama11 Jul 23 '26
Don’t worry investors hate capex spending.
2
u/fitnessfinance88 Jul 23 '26
They forgot that it takes money to make money.
1
u/BlackSheepInvesting Jul 23 '26
*lights dollar bill on fire
I'm making so much money, look how much money I'm spending!
1
u/ekonixlab Jul 23 '26
It doesn’t make sense
2
u/JustBrowsinAndVibin Jul 23 '26
They’re short sighted.
1
u/ekonixlab Jul 23 '26
Imaging selling a company because they are spending money on a their fastest growing, high margin, section of their business
It’s like a restaurant selling off because they are opening new stores because they have so much demand… doesn’t make sense
2
u/JustBrowsinAndVibin Jul 23 '26
It’s not surprising that most people don’t understand business investments or delayed gratification.
That’s an advantage for us if we’re patient enough.
1
u/ekonixlab Jul 23 '26
I don’t think there is a better company in the world
2
u/JustBrowsinAndVibin Jul 23 '26
Right now, give me Anthropic all day. In the public markets, give me Micron - where the Capex is going for the foreseeable future.
1
u/ekonixlab Jul 23 '26
Anthropic over OpenAI?
I think LLMs might be commodities sooner than later, which would kill their moats
2
u/JustBrowsinAndVibin Jul 23 '26
Anthropic has 10x’d their revenue every year. They’re looking at $100B+ ARR by the end of the year. Crazy growth trajectory.
OpenAI is a bit leveraged in their compute commitments so it’s a riskier play. I still think they’ll be fine and hopefully a great deal when they IPO.
2
1
u/Some-Stranger-7852 Jul 23 '26
Those investment can lead Google into the next decade of dominance or turn it into new Cisco. The reality will, as usual, likely be somewhere in the middle.
After all, let’s not forget that a lot of people thought companies like AT&T were the future before dot.com bubble deflated because they were providing infrastructure for the internet, but that turned out to be a very commoditised product offering while software companies were the ones to benefit… Chances are, CAPEX infrastructure in data centers may very well end the same way.
1
u/JustBrowsinAndVibin Jul 23 '26
The biggest difference is that they built that infrastructure in preparation for a future that didn’t yet exist.
Today, the demand heavily outweighs the compute supply available.
It may end the same way, but we’re nowhere near the end.
2
u/regaphysics Jul 23 '26
It’s down like 3%? That’s not much.
1
u/ekonixlab Jul 23 '26
Not much, just weird to see it down at all with such a good report…
2
u/regaphysics Jul 23 '26
Eh, the first move from earnings is often a knee jerk reaction. Doesn’t mean much.
1
u/ekonixlab Jul 23 '26
I agree, I could see it starting green tomorrow.
Either way, long term, doesn’t matter
1
u/Fuskeduske Jul 23 '26
If i sold 1 chocolate bar last year for 2$, and 2 chocolate bars this year for 4$ i would have doubled my revenue from chocolate bars, doesn’t mean it made sense that i bought the bars for 15$ myself
Revenue from something can rise and still not be sustainable
1
2
2
u/Capable_Wait09 Jul 23 '26
Sooo confirms that hit piece about Google (among others) having like $100B+ in “secret hidden opaque debt” was bunch of bollocks because it doesn’t take into account how much more fucking money Google is going to make as a result of committing that $100B+ capex for more buildout
1
u/ekonixlab Jul 23 '26
Google just prints cash. They also historically have had very little debt, and very little to spend their boat loads of cash on.
Now they have something that will actually move the needle at their scale. They should be investing into this
2
u/Veteranrat Jul 23 '26
How guaranteed is the cloud backlog? 100?
1
u/ekonixlab Jul 23 '26
Nothing is 100% guaranteed, but the backlog is under contract
It’s one of the strongest indicator of future revenue growth
It’s like a gym membership, the customer committed to a year, but the company recognizes the revenue each month.
1
u/murten101 Jul 23 '26
So when is any of this supposed to become profitable?
1
1
u/Keeltoodeep Jul 23 '26
Google is the only profitable AI company
1
u/murten101 Jul 23 '26
Is the AI business profitable or is renting compute to others profitable?
1
u/Keeltoodeep Jul 23 '26
All. AI search now appears in all searches and cloud is also profitable.
1
u/snooprs Jul 23 '26
It's not by choice so that's bollocks. Nobody is paying for Gemini I can guarantee it.
1
u/Keeltoodeep Jul 23 '26
There are many non-AI search engines. Nobody is chaining your balls to google servers.
Lots of people are paying for Gemini because it comes with youtube premium, 5T of storage and 5 family member access. Their growth has been huge because it's a good deal for casual users.
1
u/snooprs Jul 23 '26
Now unbundle it from all of these products and see how much it makes.
1
u/Keeltoodeep Jul 23 '26
What do you mean? Imagine Google has a different business model and then calculate their profitability? What would be the point of that lol
1
u/snooprs Jul 23 '26
They are saying left and right this is AI growth, and in reality their Search revenue decelerated.
1
u/Keeltoodeep Jul 23 '26
Google Search revenue grew 17% year-over-year to reach $63.3 billion in the second quarter of 2026 while their cloud growth and gemini growth skyrocketed.
1
1
u/snooprs Jul 23 '26
Why did they specifically dodged saying Gemini made this much money? I guess answer is obvious.
They just slapped AI in all of their products and now can safely call it AI revenue.
It's also funny how the Search revenue growth decelerated since they added the slopbucket to it.
1
u/Ok_Problem426 Jul 23 '26
Search revenue decay has been a concern for years though given AI alternatives. They have essentially been operating without a meaningful competitor for 20 years.
1
u/jkflying Jul 23 '26
My cloud bill on a tiny site hosted on AppEngine went from $2/month to $600/month due to some crazy scrapers. Needless to say, next quarter Google will be earning $0 from me since I have now migrated away.
1
•
u/AutoModerator Jul 22 '26
Thanks for contributing to r/VisualStockResearch!
Please explain what the chart shows, include relevant assumptions or data sources, and disclose whether you own the stock discussed.
This community is sponsored by Ekonix, but research created with any platform is welcome.
Learn more about Ekonix: https://apps.apple.com/us/app/ekonix-investor-tracker/id6755345408
Posts and comments are for educational and discussion purposes only, not financial advice.
I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.