Alphabet’s second quarter earnings results show that Google is earning massive amounts of money but is also spending so much that it reported a negative free cash flow due to infrastructure spending.
Massive Earnings
Q2 2026 revenue is $119.8 billion, which is up 24% year over year.
Where The Money Comes From
The earnings release shows that Search & Other account for most of the earnings, $63.3 billion. Google Cloud accounts for $24.8 billion, Google subscriptions, platforms & devices accounts for $12.9 billion, and YouTube ads brought in $11.1 billion.
- Google Search & other: $63.3 billion
- Google Cloud: $24.8 billion
- Google subscriptions, platforms & devices: $12.9 billion
- YouTube ads: $11.1 billion
Total revenue: $119.8 billion
Google’s strategy of diversifying their revenue streams is clearly paying off. Google earned $2.9 billions dollars more in the second quarter from Search & Other than it did in the first quarter, an increase of +4.8%.
The difference between first and second quarters show that Google is consistently earning more across all of its businesses.
Earnings Growth Q1 2026 – Q2 2026
- Google Cloud: +$4.8B (+23.8%)
- Google Search & other: +$2.9B (+4.8%)
- YouTube ads: +$1.2B (+12.2%)
- Google subscriptions, platforms & devices: +$0.5B (+4.2%)
Many in the search marketing and publishing communities are unhappy because Google’s AI search strategy sends less clicks to websites than classic search did. Another complaint is that Google is hoarding traffic within its own ecosystem of services and websites.
Is that the reason why YouTube’s earnings soared by 12.2% this quarter over last and Search earnings increased by nearly 5%?
$5.85 Billion Dollars Negative Free Cash Flow
Perhaps the most surprising detail to come out of the earnings result is that Google is running a negative free cash flow of nearly six billion dollars.
Negative free cash flow does not mean that Alphabet lost money this quarter, they did not. It means Alphabet spent more cash than it generated after accounting for capital investments.
Free cash flow: -$5.855 billion
Alphabet’s second quarter operating cash flow was $39.069 billion. Their capital expenditures equaled $44.924 billion. Their free cash flow for Q2 2026 was -$5.855 billion (operating cash flow minus capital expenditures).
Google’s investor presentation explained why they are running a negative free cash flow in the second quarter of 2026:
Alphabet’s presentation explained why they’re spending so much:
“We’re innovating at scale with incredible velocity.
Since launching Gemini 3 last November, our momentum has accelerated. We’ve rolled out increasingly capable generative media models; shipped features across Chrome and the Gemini app, launched Antigravity and our first model
in our Gemini 3.5 series.Recently at our I/O annual developer conference, we showcased new advances across models, coding, and agents. This progress reflects our deep focus on delivering tangible value to…
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