TLDR
- Alphabet reported Q2 net income of $112.1 billion, up 298% year-over-year — a record for any public company.
- EPS came in at $9.11, crushing the $2.87 consensus estimate, driven largely by $99 billion in investment gains.
- The gains stem from Alphabet’s stakes in SpaceX (which IPO’d at a $1.77T valuation) and Anthropic (valued at $965B, up from $350B).
- Q2 revenue grew 24% to $119.8 billion, with Google Cloud surging 82%.
- Despite the blowout quarter, GOOGL stock fell over 7% as investors worried about rising capex — now guided at $195B–$205B for 2026.
Alphabet (GOOGL) stock was trading around $317.68, down 7.14%, following the Q2 earnings release.
Alphabet posted earnings per share of $9.11 in the second quarter, against Wall Street estimates of $2.87. The beat was extraordinary — and the reason for it was equally extraordinary.
The company booked nearly $99 billion in “other income” during the quarter, almost entirely from unrealized and realized gains on equity investments. That $99 billion flowed through to net income, pushing it to $112.1 billion — a record not just for Alphabet, but likely for any company in history.
Of that $99 billion, $6.26 of the $9.11 EPS came directly from investment gains, not core operations.
SpaceX IPO Was the Big Catalyst
SpaceX went public in early June at a valuation of $1.77 trillion. Alphabet held roughly a 6% stake going into the IPO. That stake had been valued at a fraction of that when SpaceX was a private company worth around $400 billion just a year ago.
Alphabet’s Q2 10-Q confirmed it now holds $94.1 billion in SpaceX equity. Of that, $80 billion is under short-term sale restrictions, and $14.1 billion is locked up through Q3 2027.
Anthropic also played a major role. Its private-market valuation jumped from $350 billion to $965 billion in the same period. Alphabet has invested $13.3 billion into Anthropic since April 2023, with commitments of up to $30 billion more.
On the operating side, revenue grew 24% to $119.8 billion. Google Cloud was the standout, growing 82% in the quarter. CEO Sundar Pichai called it proof the company’s “full stack approach to AI is delivering real, measurable value.”
A Circular Relationship Worth Watching
Some analysts have flagged a circularity issue in Alphabet’s Anthropic relationship. As part of their deal, Anthropic has committed to purchasing at least five gigawatts of computing capacity from Google Cloud. That spending directly feeds the Cloud growth that investors are rewarding.
In short: Alphabet invests in Anthropic, Anthropic pays Google Cloud for compute, Anthropic’s valuation rises, and Alphabet books the gain as profit.
Tax and accounting consultant Robert Willens described it plainly in April: “It’s interesting that they’re able to control or influence the value of one of their own assets.”
Despite the headline numbers, GOOGL fell more than 7% after hours. Investors focused on rising capital expenditure guidance — Alphabet raised its 2026 capex range to $195B–$205B, up from a prior estimate of $180B–$190B — and competition in the AI model space facing its Gemini family.
As of the Q2 10-Q filing, Alphabet holds $94.1 billion in SpaceX equity, with $80 billion subject to short-term sale restrictions.
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