Alphabet Inc (NASDAQ:GOOG) reported stronger-than-expected second-quarter results, with revenue and earnings boosted by gains across Search, YouTube, and Cloud, as the company accelerates its pivot into artificial intelligence.
Total revenue rose 13.8% year-over-year to $96.4 billion, beating Wall Street expectations by about 3%, while earnings per share reached $2.31, ahead of the $2.18 consensus.
Despite a $1.4 billion legal charge that impacted margins, analysts noted the core business showed strong profitability.
“This is the cleanest print we have seen from Google in some time,” UBS wrote, pointing to 12% growth in Search revenue and a 32% jump in Cloud revenue, both outpacing consensus estimates.
YouTube ad revenue also climbed 13% to $9.8 billion, aided by monetization improvements in Shorts. Cloud revenue reached $13.6 billion, helped by robust enterprise demand and a $16 billion quarter-over-quarter increase in backlog.
The company raised its 2025 capital expenditure guidance by $10 billion to $85 billion to support AI infrastructure investments. While the increase will weigh on near-term free cash flow, analysts including Bank of America said it is “defensible,” given strong utilization trends and momentum in Cloud bookings.
Alphabet’s paid click growth reaccelerated to 4% in the quarter, a positive signal for its core ad business. Oppenheimer noted that early data from AI-powered search features is “monetizing similar to legacy search and driving over 10% more queries.”
Still, regulatory uncertainty remains a concern for some. “We maintain our Neutral rating as we continue to believe that Google's P/E trading multiple will remain under pressure,” UBS said, citing unresolved legal issues and potential market share loss in Search.
Despite the overhang, several analysts raised their price targets: Bank of America to $217, Wedbush to $225, and Oppenheimer to $235, calling Alphabet an “AI winner.”
Shares were up around 1.1% in Thursday afternoon trading and are now valued at about 18.9 times Wedbush’s revised 2026 EPS estimate, a discount to both the S&P 500 and digital advertising peers.