Alphabet (GOOG/GOOGL) is scheduled to hold its second-quarter 2026 earnings call on July 22 at 1:30 p.m. Pacific Time and 4:30 p.m. Eastern Time, which is 4:30 a.m. Beijing time on July 23, according to BlockBeats. Earnings materials will be released before the call.
Into the report, investors are watching five areas closely: AI capital expenditure guidance, return on investment, Google Cloud growth, search advertising performance, and changes in cloud backlog.
Cloud and Search are still seen as the main earnings anchors
BofA analyst Justin Post kept a positive stance on Alphabet and said Google Cloud and Search remain the quarter’s most important earnings supports. He expects cloud growth to stay strong, while search advertising could benefit from better monetization as AI features are folded into the product.
BofA also warned that rising hardware costs, including memory, may push up Alphabet’s AI infrastructure budget. That leaves room for the company’s capital spending outlook for this year to move higher again.
BMO is also constructive and raised its target price on Alphabet ahead of the report. The bank said data center expansion and backlog should continue to support Google Cloud growth, with demand for AI training and inference still building.
Even so, BMO noted that Gemini’s product cadence could introduce uncertainty. Investors will be looking for clearer guidance from management on the commercialization path for its AI products.
Costs and cash flow are another major line of focus
HSBC is more focused on the cost side. The bank said the market needs to assess whether customers may shift toward lower-cost AI models and whether higher hardware prices will continue to affect Alphabet’s spending plans.
Under that lens, the scale of AI investment is no longer the only issue. Efficiency of spending, the impact on margins, and pressure on free cash flow matter as well.
Not every preview is bullish on Alphabet. A note by finance professor and CTA Damir Tokic has already stirred discussion among U.S. equity investors. Tokic argued that Alphabet could be the first among the largest tech companies to lower its AI capital expenditure outlook. He tied that risk to weaker free cash flow, higher financing costs, and the lack of enough proof that AI investment is generating adequate returns.
Tokic said Alphabet had already raised its 2026 AI spending plan, and the market had expected the company to keep stepping up investment in data centers, servers, and cloud infrastructure. But that heavy spending is squeezing cash flow. If Alphabet keeps an aggressive expansion pace, it may need to rely on debt or equity financing, which could bring credit risk and dilution pressure for shareholders.
The earnings report may come down to whether management can prove the spending is working
IG’s preview also highlighted free cash flow risk. Alphabet’s free cash flow has already come under pressure because of higher AI and data center spending, and the market will be watching whether that trend continues.
If Google Cloud keeps posting strong growth, search advertising remains stable, and management does not raise capex guidance again, the stock may find support more easily. If capex guidance moves higher, investors may reassess discounted future cash flows.
At the broadest level, the key question for this earnings report is whether management can show that AI spending is turning into revenue growth. Google has multiple assets in place, including its search entry point, advertising system, cloud business, TPU, and Gemini models. But high-intensity capital spending has also raised the market’s threshold for acceptable returns.
If the coming results fail to show that AI investment is producing enough revenue, Alphabet’s capital spending plan and its stock price could both face repricing.