Alphabet’s cloud backlog crosses 500 billion dollars as AI demand outruns capacity

1:15 PM · July 24, 2026

Alphabet reported second-quarter revenue of 119.8 billion dollars, up 24 percent year over year, with operating income rising 30 percent to 40.8 billion dollars. Google Cloud was the standout segment, with revenue surging 82 percent year over year to 24.8 billion dollars, well above the 22.4 billion dollars Wall Street had expected, while cloud operating income jumped to 8.8 billion dollars from 2.8 billion dollars a year earlier. The most closely watched figure was Alphabet’s cloud backlog, the value of signed contracts not yet recognized as revenue, which crossed 500 billion dollars for the first time, rising to 514 billion dollars from roughly 460 billion dollars the prior quarter. Alphabet said it expects to recognize just over half of that backlog as revenue over the next 24 months, a sign that customers are signing AI infrastructure deals faster than Google can currently deliver on them. The growth came at a steep cost: capital expenditures reached 44.9 billion dollars in the quarter, pushing free cash flow to negative 5.9 billion dollars, and Alphabet raised its full-year capital expenditure guidance to a range of 195 billion to 205 billion dollars. Shares fell more than 4 percent after the results as investors weighed the scale of AI infrastructure spending against how long it will take that backlog to convert into actual revenue, a tension now shaping how Wall Street reads every major cloud provider’s earnings this season.