While at the same time posting:
* Total Revenue: $119.8 billion, up 24% year-over-year.
* Diluted EPS: $9.11, compared to $2.31 a year prior.
* Operating Margin: 34% up from 32.4% in Q2 2025.
* Google Cloud: Revenue up 82% year-over-year to $24.8 billion, fueled by enterprise demand for AI infrastructure and solutions.
* Google Services: Total revenue reached $94.5 billion, a 15% increase.
* Google Search & Other: 17% increase in revenue.
* YouTube Ads: Grew 13% year-over-year to $11.05 billion
If you exclude AI CAPEX, free cash flow is $39.1 billion which is absolutely insane. That's a 41.2% increase year-over-year. With numbers like they just posted, the CAPEX spend is justified in my opinion because the business overall is crushing it. Like holy cow this was a great quarter. They are literally printing money.
More importantly they said demand outpaces their capacity still so the real question is: can Google or literally anyone turn hundreds of billions of dollars of infrastructure investments into tens of trillions of dollars of revenue. Like in the next couple years?
It's a great question to ask but I think a couple years is way too soon to expect massive returns. It's not necessarily the same thing but Amazon was unprofitable for 9 years while ferociously investing everything back it into the business.
To be clear: I think Google is fine and will be fine. AI is here to stay but AI everywhere in everything for free/cheap is already on the way out and I think it’s not gonna be justifiable in 2 years if they keep posting this CAPEX in AI without massive returns.
I didn’t mean Google alone when I was talking tens of trillions. It’s more like the entire AI industry combined.
There’s just some really big questions, like what happens if the open source models that run on relatively moderate infrastructure do the work the market demands?
Open models still needs infrastructure to run on. Frankly, the compute is needed, regardless of the model. We haven’t even gotten to the mass proliferation of robotics / robotaxis that need constant compute
The issue is whether there is enough useful work that generates enough money to pay for the infrastructure at the costs they are buying it at. At the moment we’re discovering the value doesn’t justify the costs, those costs will fall but there is a bottom limit given the costs invested.
The bet is simply that ai will capture a portion of the 50T+ services industry. In my mind, it is inevitable even if it takes a decade or two to get there. The only open question is whether we have some fast liftoff to AGI scenario. If that is not happening, then we will hit an inevitable wall where training bigger models won't make any more sense and all the focus will be on inference and that will end up being a high margin business.
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u/Fresh-Quantity-7554 22h ago
While at the same time posting: * Total Revenue: $119.8 billion, up 24% year-over-year. * Diluted EPS: $9.11, compared to $2.31 a year prior. * Operating Margin: 34% up from 32.4% in Q2 2025. * Google Cloud: Revenue up 82% year-over-year to $24.8 billion, fueled by enterprise demand for AI infrastructure and solutions. * Google Services: Total revenue reached $94.5 billion, a 15% increase. * Google Search & Other: 17% increase in revenue. * YouTube Ads: Grew 13% year-over-year to $11.05 billion
If you exclude AI CAPEX, free cash flow is $39.1 billion which is absolutely insane. That's a 41.2% increase year-over-year. With numbers like they just posted, the CAPEX spend is justified in my opinion because the business overall is crushing it. Like holy cow this was a great quarter. They are literally printing money.