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Alphabet (GOOG): Q2 2026 pre-earnings brief

Alphabet enters its July 22 call with strong Q1 growth, a proposed $80B equity raise, and a $180B-$190B 2026 CapEx plan. Here are the facts, estimates, scenarios, and questions to carry into the call.

Big Tech Pre-Earnings Brief
Big Tech Pre-Earnings Brief@Bs Zhang
Call: July 23, 2026 at 4:30 a.m. Shanghai time (July 22 at 1:30 p.m. PT / 4:30 p.m. ET).
Alphabet's Q1 showed strong demand across Search, Cloud, and AI. The next call has to explain whether that demand is converting into revenue fast enough to support a much larger capital plan.

Facts

  • Since Q1, Alphabet announced a proposed $80B equity raise. Its June investor presentation said the expected total was approximately $85B, including a $10B Berkshire Hathaway investment and an oversubscribed underwritten offering. Management said the proceeds will help fund AI infrastructure and compute. June investor presentation, June 3
  • Management now expects 2026 CapEx of $180B-$190B and said 2027 CapEx should be significantly higher. It also said AI demand from enterprises and consumers is exceeding available supply. June investor presentation, June 3
  • Q1 revenue was $109.9B, up 22% year over year. Search & other advertising was $60.4B, up 19%; YouTube ads were $9.9B, up 11%; Google Cloud was $20.0B, up 63%. Operating margin was 36.1%. Q1 results, April 29
  • Q1 CapEx was $35.7B and operating cash flow was $45.8B. Total remaining performance obligations were $467.6B, including $462.3B tied to Google Cloud. Just over 50% was expected to be recognized over the next 24 months. Q1 Form 10-Q, filed April 30
  • Management said Cloud was compute-constrained and that revenue would have been higher if demand could have been met. It also said Wiz would create a low-single-digit percentage-point headwind to Cloud operating margin for the rest of 2026. Q1 call remarks, April 29
  • Switzerland's competition authority opened a preliminary investigation on July 14 into Google's removal of the Android search choice screen. The question is whether the change limits competing search engines' visibility. Report dated July 15

Estimates

  • A July 7 public preview put Q2 EPS consensus at $2.86, up 23.8% year over year. Public revenue estimates are less consistent: one tracker showed about $116.5B, while other providers showed higher figures. Treat the range as an estimate, not a fact. Preview dated July 7 MarketBeat earnings tracker

Management promises to revisit

  1. Can Cloud turn its $462.3B RPO into revenue on the stated timetable while supply remains tight?
  2. Does the $180B-$190B 2026 CapEx range still hold, and what would make 2027 materially higher?
  3. How much of the next quarter's margin pressure comes from depreciation, energy, and Wiz?
  4. Is AI Mode increasing ad value and search usage, or shifting activity toward answers with fewer monetizable clicks?
  5. What operational changes, if any, follow the Swiss choice-screen investigation?

Bull case: opinion

Cloud keeps compounding as backlog converts. AI Overviews and AI Mode expand search usage and improve ad value. Gemini subscriptions and enterprise AI add revenue beyond advertising.

Bear case: opinion

AI answers pressure ad economics while CapEx, debt, equity issuance, depreciation, and energy costs rise faster than monetization. Regulatory remedies could also limit default-search distribution or increase compliance costs.
This is a research brief, not a share-price forecast or investment recommendation.

Sources

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