Alphabet Inc. (GOOGL) reported a significant increase in Google Cloud revenues, which surged 82% year-over-year to $24.8 billion in the second quarter of 2026. This growth was largely driven by demand for enterprise AI solutions and Google Cloud Platform (GCP) services, as well as a more than tripling of operating income to $8.8 billion during the same period, resulting in an operating margin increase to 35.6%.
Google Cloud’s customer acquisition doubled year-over-year, with nearly 90% of Fortune 100 companies utilizing its services. The cloud backlog also reached $514 billion, with expectations that over half will convert to revenue within the next 24 months. However, Alphabet faces supply constraints as AI demand outpaces available compute capacity, leading to potential margin pressures in the near term.
In comparison, Amazon’s AWS reported a 37% increase in revenues to $42.2 billion in the same quarter, while Microsoft’s Azure revenues surpassed $100 billion for fiscal 2026. Alphabet’s stock has risen 8.9% year-to-date, underperforming the broader technology sector’s growth of 15.4%.
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