Key Takeaways:
Alphabet and Meta delivered diverging Q2 results, with Alphabet's cloud revenue jumping 82% to $24.77 billion while Meta missed EPS by 14%.
"AI is accelerating our core business today, powering our next generation of products," Mark Zuckerberg, chief executive officer at Meta, said, even as costs jumped 55%.
Meta's revenue climbed 27.96% to $60.8 billion, with ad revenue reaching $59.36 billion. EPS came in at $6.18, missing the $7.22 consensus by 14.42% and ending a six-quarter beat streak. Operating margin collapsed to 31% from 43% as total costs jumped 55%, weighed down by $2.40 billion in legal charges and $1.18 billion in severance tied to an 8,000-employee reduction. Free cash flow plunged 91.31% to $784 million.
Alphabet posted revenue of $119.8 billion, up 24.23%. Google Cloud generated $24.77 billion, accelerating to 82% growth, and operating margin expanded to 34%. Free cash flow swung to negative $5.86 billion, and the company suspended its buyback after raising roughly $70 billion in combined equity and debt.
Meta guided full-year capital expenditures to $130 billion to $145 billion, with total expenses raised to $165 billion to $169 billion. Alphabet shares are up 13.79% year to date; Meta is down 10.48%. The divergence shows the market has already picked a side in the AI spending race.
Google Cloud's operating income more than tripled to $8.8 billion from $2.8 billion a year earlier, and its backlog reached $514 billion after adding more than $50 billion sequentially. Gemini models process 22 billion API tokens per minute, and the Gemini app crossed 950 million monthly active users. Nearly 90% of the Fortune 100 use Gemini Enterprise, according to Pichai.
Meta's ad engine remains the growth driver, with impressions up 14% and price per ad up 12%. Family daily active people reached 3.60 billion. But the company faces an unpriced risk from youth-related U.S. trials scheduled for 2026, and it guided third-quarter revenue to $61 billion to $64 billion.
The results give Alphabet the cleaner fundamental story, with cloud compounding and margins widening. Investors will watch whether Meta's Q3 revenue guide holds and whether its $130 billion to $145 billion capex plan begins producing measurable ad-yield gains.
This article is for informational purposes only and does not constitute investment advice.
