Google just reported amazing earnings with a huge EPS beat EPS $9.11 vs. Est. $2.89 & Revenue $119.8B vs Est. $116.9B. But the EPS seemed to good to be true & because it is.
The real EPS was : ~$2.85 vs Est. $2.90 (miss) let me explain. Google’s $9.11 reported EPS is heavily inflated by a large paper gain on its investments. Google reports a $98B unrealized gain on its
$SPCX stake as of the end of Q2 & this is why Google isn't pumping 10% because they still have to wait end of the year to sell this stake.
Googles Cloud backlog just hit $467.6B, up 406% from last year. In simple terms, customers have already committed to spending hundreds of billions with Google Cloud in the future. That is a big deal because it gives Google much better visibility into future growth. Cloud revenue also grew 63% and passed $20B in a quarter for the first time. Backlog is not revenue today, but it shows demand for Google’s AI and cloud services is still accelerating.Management also said existing customers are consuming more than 50% above their original commitments while new customer acquisition has more than doubled YoY.
That demand is already translating into insane fundamentals with Cloud growing 82% while operating margins approach 36%.
Googles Capex continues to rise! $45B this quarter & $132B ytd up 100%. This is very Bullish for AI stocks & compute like $MU $NBIS $AMD $NVDA . Google is spending heavily because AI demand is growing faster than its available capacity. Management now expects $180B–$190B in 2026 CapEx, with spending increasing again in 2027. Demand is justifying one of the largest capex programs in corporate history with Cloud growing 82% and generating more operating income in a single quarter than it produced in total revenue less than three years ago.After hours we are already seeing chip stocks pump so this is definitely a positive.
CEO Sundar Pichai Commentary:
🔸 “Our AI investments are redefining what’s possible across every part of our business.”
🔸 “Q2 was an amazing quarter, with Alphabet revenues growing 24% year-over-year and Google Cloud revenues accelerating to 82% growth, driven by demand for AI infrastructure and AI solutions.”
🔸 “It’s great to see wide adoption of Gemini Enterprise, with nearly 90% of the Fortune 100 using it.”
🔸 “Gemini models now process 22 billion API tokens per minute and the Gemini App has 950 million monthly active users.”
🔸 “We are seeing strong demand for our security solutions, and our new Gemini 3.5 Flash Cyber delivers highly cost-efficient performance at the frontier.”
🔸 “These outstanding results show that our differentiated, full stack approach to AI is delivering real, measurable value for consumers, customers, and our partners globally.”
🔸 “Nearly 90% of the Fortune 100 now use Gemini Enterprise while Gemini models process 22B API tokens per minute.”
The Gemini app has also reached 950M monthly active users.
Despite the small EPS miss the 467B backlog is the highlight most investors are ignoring. Can't believe the market is punishing Google for its amazing SpaceX investment haha.
This part is usually for paid members, so enjoy the free trial. :)
Technical Analysis & buy zone
Google could go to test the trendline it’s been holding since April 2025 (liberation day). Our long-term buy zone remains 300-350 with a deep buy at 270 if Google breaks below 308. The long-term setup still looks attractive, but the stock needs to show more strength before the short-term chart improves.
Watch $341. Falling below that could push the stock toward $330, and a break there may open the door to $315.
Those lower levels could offer attractive buying opportunities. On the upside, a move back above $375 would be bullish and could lead to a test of $400. Charts still show a very nice uptrend for GOOGL, so I like owning and using any dips to buy. The area which lines up with the long-term trend lies near $315, but expect GOOGL to be higher into year-end and like buying weakness, if/when this happens after earnings.
We continue to love Google long-term & will continue to invest in this company. AI does not look fake, but parts of the market may still be overpriced. For AI stocks, this supports continued demand for chips, servers, networking, power and data centres. However, Google raised 2026 spending to $195–$205 billion, hurting free cash flow and showing how expensive the AI race has become. Google’s future looks strong if Cloud growth eventually justifies the massive spending.
Comments
Nothing yet. Say the first thing.
Sign in to join the conversation.