TLDR
- Alphabet reported second-quarter net income of $112.1 billion, up 298% year-over-year — a record for any public company.
- EPS came to $9.11, beating the consensus estimate of $2.87, driven largely by $99 billion in investment gains.
- The gains stem from Alphabet’s stakes in SpaceX (which went public at a valuation of $1.77 trillion) and Anthropic (valued at $965 billion, up from $350 billion).
- Second-quarter revenue grew 24% to $119.8 billion, with Google Cloud up 82%.
- Despite the big quarter, GOOGL stock fell more than 7% as investors worried about higher capital expenditures — now targeted at $195 billion-$205 billion for 2026.
Alphabet (GOOGL) stock traded at $317.68, down 7.14%, after announcing Q2 earnings.
Alphabet reported earnings per share of $9.11 in the second quarter, versus Wall Street estimates of $2.87. The rhythm was exceptional, and the reasoning behind it was exceptional as well.
The company generated nearly $99 billion in “other income” during the quarter, almost all of it from unrealized and realized gains on equity investments. That $99 billion flowed into net income, pushing it to $112.1 billion — a record not just for Alphabet, but likely for any company in history.
Of the $99 billion, $6.26 of the $9.11 earnings per share came directly from investment gains, not from core operations.
The SpaceX IPO was the big catalyst
SpaceX went public in early June at a valuation of $1.77 trillion. Alphabet owned approximately 6% of the shares before the IPO. This share was valued at a fraction of that time SpaceX It was a private company worth about $400 billion just a year ago.
Alphabet’s Q2 10-Q confirmed that it now owns $94.1 billion in SpaceX shares. Of this amount, $80 billion is subject to short-term selling restrictions, and $14.1 billion is held until the third quarter of 2027.
Anthropology also played a major role. Its valuation in the private market jumped from $350 billion to $965 billion in the same period. Alphabet has invested $13.3 billion in Anthropic since April 2023, with commitments of an additional $30 billion.
On the operating side, revenues rose 24% to $119.8 billion. Google Cloud was the leader, growing 82% during the quarter. CEO Sundar Pichai called it evidence that the company’s “entire approach to AI delivers real, measurable value.”
A circular affair worth seeing
Some analysts have pointed to a circular problem alphabet Anthropic relationship. As part of the deal, Anthropic committed to purchasing at least five gigawatts of computing capacity from Google Cloud. This spending directly feeds into the cloud growth that investors reward.
In short: Alphabet invests in Anthropic, Anthropic pays Google Cloud for computing, Anthropic’s valuation rises, and Alphabet records the gain as a profit.
Tax and accounting consultant Robert Wellens put it plainly in April: “It is interesting that they are able to control or influence the value of one of their own assets.”
Despite the headline numbers, GOOGL stock fell more than 7% after hours. Investors focused on increasing capital spending guidance — Alphabet raised its 2026 capex range to $195 billion-$205 billion, up from a previous estimate of $180 billion-$190 billion — and AI model competition facing the Gemini family.
As of a Q2 2010 filing, Alphabet owns $94.1 billion in SpaceX shares, with $80 billion subject to short-sale restrictions.
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