Alphabet Inc. (GOOGL) is set to report its second-quarter earnings after the market closes on Wednesday, with investors closely watching whether the Google parent can translate its massive AI spending into tangible revenue growth. The report arrives at a pivotal moment, as concerns over the delayed launch of the Gemini 3.5 Pro model and intensifying competition from Chinese open-source AI developers have raised questions about the company's competitive edge.
Q2 Expectations: Wall Street analysts forecast earnings per share of $2.95 on revenue of $116.98 billion, according to consensus estimates. That compares to EPS of $2.31 and revenue of $96.4 billion in the same period last year. Google Cloud Platform (GCP) revenue is expected to reach $22.4 billion, a 64% surge from $13.6 billion a year ago, driven by enterprise demand for AI tools. Remaining performance obligations – a measure of future contracted revenue – are projected to exceed $488.1 billion, signaling strong forward demand. Advertising revenue is estimated to grow 13.7%.
AI and Chip Developments: Alphabet shares got a boost earlier this week after reports emerged that Google is testing a new internal chip codenamed “Frozen v2,” designed to embed parts of the Gemini model directly into hardware for faster processing. Meanwhile, Bloomberg reported that Google delayed the Gemini 3.5 Pro model due to concerns about its capabilities relative to rivals; Google pushed back, stating it is “currently testing 3.5 Pro, an upgraded Flash model, and other models with partners.” Portfolio manager Dave Wagner noted, “While Google is missing the boat on AI coding and that's a very real growing concern ... Google's strategy is all about the ecosystem.”
Analyst Sentiment: The stock holds a Strong Buy consensus from 28 analysts with an average price target of $267.53. JPMorgan raised its target to $300, citing Google’s recent DOJ trial win and strong execution. KeyBanc also lifted its target to $300, pointing to momentum across Search, Cloud, and Waymo. Options markets imply a roughly 6.6% post-earnings move. Alphabet stock is up about 4% over the last three months, outperforming peers Amazon, Meta, and Microsoft. The company has beaten estimates in each of its last 10 quarters.
