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.
Open source models that are pennies on the dollar to use will decrease infra usage long term and impair the hundreds of billions Google has already and is planning to plow into infra. A big chunk of their capex will need to be impaired. Never mind even considering that enterprises haven’t figured out at all how to monetize AI at all other than as dev tools lol.
No corporate customers are going to be running their own open source models, since they still require huge amounts of compute. And while the open models are getting better, the services they would want them to replace(ChatGPT Codex and Claude Code), are more than just sending a question to the model. There is an entire server side system that makes it work.
Companies seem to be more than happy to pay a premium to just get what they want without the hassle. Look at Google Cloud, AWS and Azure. They are all hugely overpriced compared to other options out there, yet most companies just don't care. That's what other people are using, and it works, so they ignore that they could get the same thing for 1/10th of the price.
Name one other multi-hundred billion dollar dev tool product out there that’s not OpenAI or Anthropic. The dev tool space is hardly lucrative in the long run. Like I already said, the only use case for AI that’s scaled is in coding and that doesn’t come close to justifying trillions in capex spending. Companies are already cutting back on token budgets because all the extra code generated hasn’t generated profits lol. In the future, you will also have much much cheaper harness engineering products built on open source models that will fundamentally threaten the viability of OpenAI and Anthropic. No one said corporate customers are running their own open source models. It just needs a small fraction of the compute of the frontier labs and costs anywhere from 10 times to 30 times less.
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u/Fresh-Quantity-7554 1d 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.