The Transcript

We write a weekly newsletter of quality quotes from Earnings Calls | Editor: @Skrisiloff | Lead Author: @ekmokaya | Publisher: @Avondaleam |

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Earnings next week include Alphabet, Tesla, Intel, IBM, Texas Instruments, ServiceNow, AT&T, Verizon, American Express, General Motors, 3M, Halliburton, SLB, Lockheed Martin, Blackstone, Charles Schwab and American Airlines.

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@EdLudlow Could he tell us a bit more about this trend and if it has continued into july:

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More from the $IBM CEO: "In the last few weeks of June, we saw clients shift their quarterly capex spend toward servers, storage, and memory purchases to secure supply-constrained infrastructure ahead of expected price increases. This dynamic impacted client buying patterns."

[Unemployed Capital Allocator @atelicinvest]

How is this still going up mid teens?

I really would like to know.

[𝐏𝐢𝐧𝐞𝐜𝐨𝐧𝐞 𝐌𝐚𝐜𝐫𝐨 @pineconemacro]

Happened fast and more capex ahead than behind them

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$GOOGL Alphabet CFO and CFO say they remain supply-constrained despite rapidly expanding AI infrastructure:

CEO: “Demand for our models is translating to strong token usage across developers and enterprise customers, and we continue to be supply-constrained—a sign of momentum and rapid adoption."

CFO: "we're still in a supply-constrained environment. I think we’ve said this now for multiple quarters in a row, and we are seeing very strong demand both from external cloud customers, as well as across the busines"

[Sundar Pichai @sundarpichai]

The numbers are in: 1.7B+ global viewers tuned in to @YouTube to watch World Cup-related videos during the tournament. ⚽️ It was our most viewed World Cup ever on YouTube, bringing lifetime views of related content to over 200B!

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Google Cloud ARR:

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$GOOG $GOOGL

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Alphabet CFO declined to disclose TPU-specific profitability.

“We don't break out margins for any specific products or infrastructure components & certainly, there are benefits from designing and manufacturing our own chips.”
$GOOGL $GOOG

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$GOOGL Alphabet CFO expects CapEx to increase significantly again in 2027

"We continue to expect our CapEx to increase significantly in 2027 and will provide more details at a later date.”

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Alphabet CFO raises capex guidance again!

"Moving to investments, we are updating our full-year 2026 CapEx guidance range to $195 to $205 billion, up from our previous estimate of $180 to $190 billion. The increase in the range is primarily due to an acceleration in the delivery of capacity to meet growing demand. As we previously shared, we continue to expect our CapEx to increase significantly in 2027 and will provide more details at a later date."

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$GOOGL Alphabet CEO: Gemini API throughput was up 38% QoQ to 22B tokens per minute:

“Our model APIs are now processing approximately 22 billion tokens per minute. That's up from 16 billion just a quarter ago.”

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$GOOGL Alphabet CBO: Retail and finance remained the strongest Search contributors

“All the major verticals contributed to the growth. Retail drove the greatest contribution, followed by really meaningful contributions from finance, tech, media, entertainment, and so on.”

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$GOOGL Alphabet CFO Anat Ashkenazi: Cloud revenue surged 82% to $24.8B, with underlying growth accelerating even excluding first-time TPU system sales.

“Cloud revenues were up 82% to $24.8 billion, driven primarily by GCP, which grew faster than cloud overall. Core GCP AI solutions and AI infrastructure were all important drivers of growth. We also began to recognize revenues from TPU system sales, which we delivered to customer data centers for the first time in Q2. Cloud revenue growth accelerated meaningfully, even after excluding the impact of TPU system sales.”

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TTM Netflix Streaming Revenues vs YouTube Ads Revenues

$NFLX $GOOG $GOOGL

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Alphabet down 5% after hours

$GOOG $GOOGL

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Alphabet double beat

CEO: "Q2 was an amazing quarter, with Alphabet revenues growing 24% year-over-year and Google Cloud revenues accelerating to 82% growth, driven by demand for AI infrastructure and AI solutions"

$GOOG $GOOGL: -1% AH

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Alphabet CEO: "As a big football fan, I was particularly excited to see Search usage hit an all-time high during the World Cup this year. This really highlights how much people turn to Google in moments that matter."

[Nick Fox @thefox]

Google Search broke all prior usage records and saw its highest usage in history right after Argentina scored their winning goal in yesterday’s match! 🤯 Great to see the global excitement for the World Cup... can't wait for the semis and final!

[Sundar Pichai @sundarpichai]

Read my full remarks here: https://t.co/CkGgVIZrcU

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An analyst tested the Alphabet management team on whether Waymo could eventually operate outside of Alphabet, but received no explicit separation criteria.

"I think it's all hugely valuable. We are really focused on scaling the business right now and executing to that extraordinary potential. And that's what we are focused on." - CEO

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@Dr_Crossroads Welcome!

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Alphabet CFO: Third-party capacity will bridge near-term supply constraints

"....given the supply constraint environment, we plan to expand the use of third-party capacity in Q3 as a bridging strategy while we build out more internal capacity. This strategy allows us to keep growing our customer base and capture greater overall value

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$GOOGL Alphabet CEO: Near-term Cloud margin dilution reflects deliberate:

"So are you willing to take upfront six-month deal to be able to serve that customer in what is a multi-year opportunity where the margins and the returns are very, very attractive over that multi-year horizon?”
customer capture rather than deteriorating long-term deal economics...While a short-term cost over a few months may be very high—in the lifetime of the deal, as we bring more capacity on, is highly ROI positive.

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Alphabet CEO says they accept elevated short-term capacity costs when they secure strategically important, multi-year Cloud customer relationships.

“There are, on the margin, very, very large customers of ours on cloud whom we are trying to support through this extraordinary moment. And the incremental opportunities they are bringing to us—while a short-term cost over a few months may be very high—in the lifetime of the deal, as we bring more capacity on, is highly ROI positive, right?"

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Alphabet CEO says they accept elevated short-term capacity costs when they secure strategically important, multi-year Cloud customer relationships.

“There are, on the margin, very, very large customers of ours on cloud whom we are trying to support through this extraordinary moment. And the incremental opportunities they are bringing to us—while a short-term cost over a few months may be very high—in the lifetime of the deal, as we bring more capacity on, is highly ROI positive, right?"