Alphabet Inc. (GOOGL) is set to report second-quarter earnings after Wednesday's closing bell, with investors focused on whether the Google parent's massive AI investments are translating into revenue growth amid a key product delay and intensifying competition. As the first of the 'Magnificent Seven' to report this season, Alphabet's results may set the tone for the broader tech sector's AI narrative.
Wall Street expects revenue of $116.93 billion, a 21.3% year-over-year increase, according to LSEG data. Cloud revenue is projected to grow roughly 64%, while advertising revenue is forecast to rise 13.7%. Benzinga Pro estimates earnings per share of $2.87 on revenue of $113.6 billion, compared to $2.31 EPS on $96.4 billion in revenue a year ago. Zacks Research pegs Google Cloud sales at $22.79 billion, up from $13.62 billion in the prior-year period.
Gemini Delay Raises Competitive Concerns
Alphabet postponed the launch of its flagship Gemini 3.5 Pro model from June, a move that has amplified investor scrutiny of the company's AI roadmap. The model is designed to bolster Alphabet's position in AI coding tools and agentic applications—two rapidly expanding segments of the AI market. The delay comes as Chinese open-source AI models gain traction and as investors question whether heavy capital expenditures are yielding sufficient returns.
Dave Wagner, portfolio manager at Aptus Capital Advisors, noted in a Reuters report: 'While Google is missing the boat on AI coding and that's a very real growing concern ... Google's strategy is all about the ecosystem.' Guggenheim analyst Michael Morris maintained a Buy rating and $450 price target, calling competitive noise an 'attractive entry for full-stack AI leader.'
Freedom Capital Markets Chief Market Strategist Jay Woods highlighted the Gemini delay as a key earnings focus: 'Watch for updates on Gemini and if the company's massive AI spending continues. With billions being poured into chips, data centers, and Gemini development, Wall Street wants evidence that AI is driving growth rather than simply driving expenses.'
Cloud Growth and Capital Spending in Focus
Alphabet raised its 2026 capital expenditure guidance to between $180 billion and $190 billion in April and has announced plans to raise approximately $85 billion through equity offerings, including an investment from Berkshire Hathaway. The cloud business continues to benefit from AI infrastructure demand and custom chips, with multi-billion-dollar agreements from Meta Platforms and Anthropic.
Beyond headline numbers, investors will scrutinize Google Search and YouTube advertising trends, Google Cloud performance, operating margins, and capex plans. Management commentary on Gemini, AI monetization, and infrastructure investments will be closely watched. Alphabet shares have declined about 9% since late April despite a 63% cloud sales jump last quarter, though the stock remains up nearly 13% year-to-date, making it the second-best performer among the Magnificent Seven.
For broader context on AI-driven market movements, see our coverage of chip stock rallies ahead of Big Tech earnings and Alphabet's custom AI chip 'Frozen v2' for Gemini efficiency.
This article is for informational purposes only and does not constitute financial advice.
