Alphabet says Wiz is beating expectations as AI spending heads even higher
Google's parent exceeded Wall Street forecasts, reaffirmed record investment plans and signaled that demand for AI infrastructure continues to accelerate.
Technology giant Alphabet, Google's parent company, reported second-quarter results that beat analysts' expectations for both revenue and profit, while signaling that it has no intention of slowing its massive spending on artificial intelligence infrastructure. The company also commented in detail for the first time on the performance of Israeli cybersecurity company Wiz since completing its acquisition earlier this year.
Alphabet reported revenue of $119.8 billion, up 24% from the same quarter last year and above analysts' forecasts. Net income reached $34.5 billion, also exceeding expectations. Growth continued to be driven by Google Cloud, while the company's search and advertising businesses remained resilient, supported by the integration of AI-powered features.
The company also reaffirmed its aggressive investment plans, maintaining its forecast for 2026 capital expenditures of $180 billion to $190 billion, nearly double the previous year's level. Most of the spending will be directed toward AI infrastructure, including data centers, servers and specialized AI chips.
CEO Sundar Pichai told analysts that the investments are necessary to meet rapidly growing demand for Gemini and Google Cloud services, adding that capital expenditures are expected to continue rising through 2027.
Pichai also disclosed new usage figures for the company's AI products. According to him, Gemini now has 950 million monthly active users, while usage of the model's API has reached 22 billion tokens per minute. He added that nearly 90% of Fortune 100 companies are already using Gemini Enterprise.
During the earnings call, Alphabet's management also discussed the performance of Wiz, the Israeli cloud security company it agreed to acquire for approximately $32 billion. According to the company, demand for Wiz's products has exceeded its initial expectations since the acquisition closed.
Alphabet said integrating Wiz into Google Cloud has strengthened its offering for enterprise customers, contributed to cloud revenue growth and helped the company win large strategic contracts. At the same time, the company reiterated that integrating Wiz is expected to continue weighing modestly on Google Cloud's profit margins during 2026, in line with previous guidance.
Pichai also said Alphabet continues to increase purchases of Nvidia AI chips while expanding investment in its own processors, including its TPU accelerators and Axion chips. He said the company's internally developed hardware helps reduce the long-term cost of training and running Gemini models.
Alphabet ended the quarter with 198,933 employees, up 6% from a year earlier.
Traffic acquisition costs (TAC), payments made to partners such as Apple to keep Google as the default search engine, rose 10% to $16.18 billion.
The company also highlighted YouTube's continued scale, saying that videos related to the World Cup attracted more than 1.7 billion unique viewers worldwide.
The results reinforce Alphabet's strategy of aggressively expanding its AI infrastructure despite record levels of capital spending. Even after planning to invest as much as $190 billion this year, the company expects capital expenditures to continue increasing in 2027 as demand for AI services and cloud computing continues to grow.
