Though Google Cloud is dominating headlines for its surprising outperformance, Alphabet’s core ad business remains robust. Google Search brought in revenue of $54.19 billion for the quarter, growing 12% year over year, while YouTube Ads revenue jumped 13% to $9.8.

Alphabet Inc. said demand for artificial intelligence products boosted quarterly sales, and now requires an extreme increase in capital spending — heightening pressure on the company to justify the cost of keeping up in the AI race.

Alphabet shares rose more than 3% in early trading on Thursday as the Google parent's earnings underscored a key message to investors: AI spending is climbing, but so are the returns.

Alphabet Inc.'s $85B AI capex is backed by a $106B cloud backlog, showcasing tangible ROI. Click for my updated look at GOOGL stock post Q2 earnings.

The hyperscaler wars are still raging despite concern earlier this year that cloud network players, including Alphabet, Amazon, and Microsoft, may cut capital spending on AI infrastructure. Concerns that surging spending to refresh and build out cloud networks accelerated when China’s DeepSeek chatbot launched with a shockingly low $6 million development cost,