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NewsDeals · GOOGL

Alphabet's Cloud order book tops $514 billion as AI Mode crosses one billion users

Google Cloud's order book reached $514 billion in the second quarter, expanding by more than $50 billion sequentially as Alphabet (GOOG, GOOGL) began recognizing revenue from TPU systems shipped to customer data centers. AI Mode crossed one billion monthly active users following its global expansion, and the company reported the feature is driving an incremental increase in overall Search queries. Search advertising revenue climbed 17% year-over-year to $63.3 billion in the same period, and the next milestone to watch is how much of the Cloud backlog converts: Alphabet has indicated it expects to recognize slightly more than half of it as revenue over the following 24 months.

By Grant HalloranNewsroomAugust 30, 20262 min readGOOGL
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Key takeaways

  • Google Cloud's order book reached $514 billion in Q2, growing more than $50 billion sequentially as Alphabet began recognizing revenue from TPU systems shipped to customer data centers.
  • AI Mode crossed one billion monthly active users after its global expansion and is driving an incremental increase in overall Search queries.
  • Google Cloud revenue rose 82% year-over-year to $24.8 billion, with segment operating income of $8.8 billion and operating margin widening to 35.6% from 20.7%.
  • Search advertising revenue climbed 17% year-over-year to $63.3 billion, while total Google advertising revenue grew 14% to $81.6 billion.
  • Alphabet expects to recognize slightly more than half of the Cloud backlog as revenue over the following 24 months.

Google Cloud's order book reached $514 billion in the second quarter, expanding by more than $50 billion sequentially as Alphabet (GOOG, GOOGL) began recognizing revenue from TPU systems shipped to customer data centers. AI Mode crossed one billion monthly active users following its global expansion, and the company reported the feature is driving an incremental increase in overall Search queries. Search advertising revenue climbed 17% year-over-year to $63.3 billion in the same period, and the next milestone to watch is how much of the Cloud backlog converts: Alphabet has indicated it expects to recognize slightly more than half of it as revenue over the following 24 months.

The quarter's numbers

Total Google advertising revenue grew 14% year-over-year to $81.6 billion, with YouTube advertising contributing 13% growth. Google Cloud was the standout print, posting an 82% revenue increase to $24.8 billion on demand for Google Cloud Platform, AI solutions, and AI infrastructure. Operating income in the segment reached $8.8 billion, more than three times the prior-year figure, and the operating margin widened to 35.6% from 20.7%. Management noted that Cloud growth accelerated meaningfully even setting aside TPU system revenue, pointing to enterprise demand that is building independent of hardware deliveries. Subscriptions, Platforms, and Devices reached $12.9 billion, up 15% year-over-year, driven by YouTube Music, YouTube Premium, and Google One. The company also said YouTube's subscription business is expanding faster than YouTube's advertising business, giving Alphabet an additional revenue channel with more predictable throughput characteristics.

The setup

Alphabet's shares have gained roughly 8% year-to-date, trailing the S&P 500's 12.7% advance despite double-digit growth across Search, Cloud, and subscriptions in the second quarter. The $514 billion Cloud backlog offers a forward look at committed capacity that advertising revenue, by its nature, cannot match. AI Overviews and AI Mode are expanding the commercial opportunities available in Search, according to the company. Analysts rate Alphabet a "Strong Buy," and Wall Street's consensus price target of $430.88 implies approximately 27% upside. The tape to watch is whether Cloud's operating margin holds the 35.6% level logged in the second quarter, and whether backlog conversion tracks the pace management has guided to.

Related reading

About this story

Filed by the newsroom of MarketPR on August 30, 2026. Source: finance.yahoo.com. Indicative figures are not investment advice.

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Frequently asked

How large is Google Cloud's order book and how much will convert to revenue?

The Cloud order book reached $514 billion in Q2, and Alphabet has indicated it expects to recognize slightly more than half of it as revenue over the following 24 months.

How many users does AI Mode have?

AI Mode crossed one billion monthly active users following its global expansion, and the company reports it is driving an incremental increase in overall Search queries.

How did Google Cloud perform financially in the quarter?

Google Cloud revenue increased 82% to $24.8 billion, operating income reached $8.8 billion (more than three times the prior year), and operating margin widened to 35.6% from 20.7%.

How has Alphabet's stock performed and what do analysts expect?

Alphabet shares have gained roughly 8% year-to-date, trailing the S&P 500's 12.7% advance, while analysts rate it a "Strong Buy" with a consensus price target of $430.88 implying about 27% upside.

How is YouTube's subscription business doing?

YouTube's subscription business is expanding faster than its advertising business, and the Subscriptions, Platforms, and Devices segment reached $12.9 billion, up 15% year-over-year.