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This Week's Exclusive Story
Alphabet’s AI Spending Question Looms Over Q2 EarningsWritten by Ryan Hasson. Date Posted: 7/15/2026. 
Key Points
- Alphabet's Q2 2026 report, due July 22, is considered pivotal given the stock trades roughly 12% below its 52-week high despite a 14% year-to-date gain.
- Google Cloud remains the central focus, as its backlog nearly doubled to $462 billion, though the Wiz acquisition and TPU rollout could pressure margins and add revenue.
- With CapEx guidance already raised to $180 billion to $190 billion and 54 analysts rating the stock Moderate Buy, a clean Cloud and Search print could push shares toward record highs.
- Special Report: Forget SpaceX. Buy the company Musk can't replace.
Alphabet (NASDAQ: GOOGL) will report its Q2 2026 results after the market close on Wednesday, July 22, and the setup heading into the report is compelling. The stock closed Tuesday, July 14, up nearly 14% year to date but still roughly 12% below its 52-week high of $408.61 after weeks of consolidation. With a beat streak on the line, a nearly half-trillion-dollar cloud backlog converting to revenue, and investors still debating the company's spending plans, this is one of the most important reports of the entire earnings season. The Headline Numbers
Marc Chaikin, founder of Chaikin Analytics, is flagging a little-known company that just secured a partnership with Nvidia - one he believes positions it ahead of Tesla in the autonomous vehicle race.
With a market-moving announcement expected on July 31st, Chaikin is urging investors to swap overpriced AI stocks for this under-the-radar name before markets open. He's also releasing a free Hotlist and Hitlist of buy and sell ideas for the second half of 2026. Get the ticker symbol and full details at no charge today
Wall Street expects earnings per share (EPS) of $2.87, up nearly 24% from $2.31 a year ago, and revenue of roughly $116.5 billion, up nearly 21% year over year. The bar is high, but Alphabet has consistently cleared it, beating consensus earnings estimates in each of the past four quarters. That includes Q1, when EPS of $5.11 crushed expectations and revenue growth of 22% was the fastest since 2022. Worth noting: management guided to a currency tailwind of only about 1 percentage point this quarter, down from 3 points in Q1. As a result, reported growth will receive less foreign-exchange support than it did last time. Google Cloud Is the Main EventNothing matters more to this report than Google Cloud. The segment grew 63% year over year in Q1 to $20.03 billion, crossing the $20 billion quarterly threshold for the first time, while its backlog nearly doubled sequentially to $462 billion. Management stated that just over half of that backlog should convert to revenue over the next 24 months, making Q2's Cloud growth rate the clearest indication of whether that conversion is on schedule. Investors should also listen for two Cloud-specific items flagged on the last call. First, the Wiz acquisition, now reported within Google Cloud, is expected to create a low-single-digit-percentage-point headwind to the segment's operating margin for the remainder of 2026. Second, Alphabet will begin recognizing a small amount of TPU hardware revenue later this year as it starts delivering chips directly to select customer data centers, with the majority of that revenue expected in 2027. Any early commentary on TPU demand could move the stock. Search, Advertising, and the AI QuestionGoogle Search grew 19% in Q1 to $60.4 billion, with queries reaching all-time highs. That put to rest, at least for a quarter, concerns that AI would cannibalize the core business. Q2 needs to confirm that resilience. Investors should watch for updated commentary on AI Overviews monetization, Gemini engagement, and advertising demand. The comparable quarter a year ago produced $96.43 billion in total revenue, so the roughly 21% growth consensus implies broad-based strength across Services, not just Cloud. The CapEx WatchThe other side of the AI story is spending. Alphabet raised its full-year 2026 capital expenditure (CapEx) guidance to $180 billion to $190 billion last quarter and told investors that 2027 CapEx will rise significantly from there. The market has been sensitive to spending headlines all year, as the reaction to the $80 billion stock offering in June demonstrated. Any further increase to the CapEx range or sharper detail on 2027 could swing sentiment in either direction. The bull case is simple: management continues to say that demand for compute exceeds supply, and the backlog supports that view. The Technical PictureFrom a technical standpoint, the trend remains bullish, in line with the fundamentals. The stock is in a healthy, higher-timeframe bull trend despite its multimonth drift lower. As long as the stock remains above June's recent pivot low near $330 a share, the bulls will likely remain comfortable holding it. For upside momentum to gain steam, investors will want to see the immediate-term downtrend break, with $375 to $380 representing the all-important momentum-shifting area. The Setup Into the PrintThe consensus among 54 analysts on MarketBeat is Moderate Buy, with a price target of $413.73, implying just over 15% upside from current levels. At a forward price-to-earnings (P/E) ratio of approximately 25, Alphabet remains one of the more reasonably valued names in the entire mega-cap complex, particularly for a company whose analysts expect full-year EPS to grow more than 32% this year. The pieces are in place. A Cloud result that holds anywhere near recent growth rates, a steady Search print, and no negative CapEx surprise would likely be enough to send the stock back toward its highs. Anything less, and the consolidation could continue. Either way, July 22 will set the tone for the stock's second half. |
