Google Cloud revenue surges, but AI expansion costs soar simultaneously
Special topic: Focus on the second quarter financial report of US stocks in 2026 Alphabet CEO Sundar Pichai Cloud's second-quarter performance exploded, with revenue soaring 82% year-on-year, and the growth rate was nearly 20 percentage points higher than the previous quarter. In the past four quarters, the demand for AI services has been strong, which, combined with the increase in AI chip sales revenue this quarter, has directly increased Google Cloud's overall growth rate by nearly 50 percentage points. The explosive growth of cloud business drove parent company Alphabet's overall revenue to increase by 24% year-on-year in the second quarter, which was better than market expectations. However, the cost pressure brought by Google's increase in AI has become increasingly prominent. Alphabet experienced a net cash burn in the quarter: cash flow from operating activities amounted to $39 billion and capital expenditures topped approximately $45 billion, leaving it unable to make ends meet. Google has been a stable cash cow since its inception, and cash burn is rare. Investors were resistant to this, and Google's stock price fell 4% in pre-market trading. Chief Financial Officer Anat Ashkenazy admitted to analysts that the company's free cash flow will continue to be under pressure, which means that cash consumption will not only occur in this quarter. Google once again raised its full-year capital expenditure guidance, raising the 2026 capital expenditure range from the previous range of US$180 billion to US$190 billion to US$195 billion to US$205 billion. This is the second consecutive quarter of increase in expenditure expectations. Data from S&P Global Market Intelligence shows that institutions estimate that Google’s full-year operating cash flow this year is expected to be US$212 billion. Based on this, the free cash flow for the full year will be the lowest or only US$7 billion (free cash flow in the first half of the year was US$4.26 billion). : Year of large capital investment Which other company is spending heavily on capital expenditure? The answer is Tesla, run by Elon Musk. The electric car manufacturer has a long-term goal of transforming into a robot and self-driving taxi company. Capital expenditures in the June quarter reached US$5.8 billion, which was about US$1 billion higher than the previous two quarters combined. Affected by the large investment, Tesla's net cash consumption this quarter was approximately US$1 billion, and subsequent expenses will continue to rise. Musk told analysts: "This is a big year for capital investment." One of the core purposes of the company's expansion of its factory is to mass-produce the Optimus Prime humanoid robot. Although Tesla's revenue increased by 26% year-on-year and vehicle sales recovered, high expenses have obscured this performance highlight. Musk's focus is no longer just selling cars. Musk may be more concerned about the integration path between Tesla and the space exploration technology company SpaceX. On Wednesday night, analysts asked about the possibility of a merger between the two companies, and Musk's statement sent a relevant signal. "We obviously can't discuss a business combination," he said, while acknowledging the growing overlap between the two businesses. Enterprise software maker ServiceNow reported on Wednesday that its second-quarter revenue growth increased several percentage points to 24%. The U.S. federal government's procurement demand is strong, and some third-quarter orders have been shipped to the second quarter ahead of schedule, boosting performance. Officially announced that some employees in departments related to self-developed large models will be laid off. A company spokesperson said that artificial intelligence is still a core strategic direction, and the team is streamlining its focus, focusing on projects with the highest customer value, and accelerating the implementation of key businesses. Some media have obtained a draft corporate announcement. AI tool manufacturer Cursor will launch a model routing and scheduling product as soon as this Wednesday. ) announced on Wednesday that it will invest up to $5 billion in AI company Anthropic in the future; Anthropic will use AMD's AI server chips starting next year. Previously, Anthropic has been enriching AI server hardware procurement channels and simultaneously evaluating chips from multiple manufacturers, including start-ups and Enterprise software company Monday.com said on Wednesday it would cut 20% of its workforce in the second half of this year. The company will continue to deploy AI, and the layoffs are aimed at creating a leaner and more goal-focused operating model. According to people familiar with the matter, Fidelity’s veteran semiconductor fund manager Adam Benjamin is about to join Michael. of family offices DFO Management. On Wednesday, it lowered its full-year revenue growth forecast, with the latest growth rate target being 4% to 5%, after previously forecasting full-year growth above 5%.