Big Tech Earnings

Five major technology corporations have accumulated approximately $1.65 trillion in off-balance-sheet AI infrastructure obligations, commitments that have octupled over four years and now exceed their reported debt. The hidden liabilities, disclosed in SEC footnotes, include Meta Platforms' $420 billion in obligations — three times its reported debt.

Alphabet reported second-quarter 2026 revenue of $120 billion, up 24% year-over-year, with cloud revenue surging 82% to $25 billion. The company expects 2026 capital expenditures between $195 billion and $205 billion for AI infrastructure. Microsoft, Alphabet, Amazon, Meta and Oracle are projected to spend more on capital expenditures than they generate in free cash flow by 2027, with combined capex rising nearly $534 billion from 2025 through 2027.

Despite strong cloud growth — Amazon Web Services expanded 28% and Microsoft's AI business hit a $37 billion annual run rate — investors remain focused on mounting buildout costs versus returns.

Alphabet reported stronger-than-expected second-quarter results on July 22, with cloud revenue surging 82% to $248 billion and search revenue climbing 17%. The company posted quarterly revenue of $1.198 trillion and earnings per share of $2.85, while capital expenditure doubled from a year earlier to $449 billion.

The results came as U.S. equity benchmarks retreated. The S&P 500 dipped 0.14% to 7,498.96 and the Nasdaq Composite fell 0.57% to 25,690.90. Tesla disappointed with adjusted earnings of $0.33 per share, missing the $0.50 consensus.

Elsewhere, Super Micro Computer surged 19.84% after raising fourth-quarter margin guidance and reporting record backlog. Advanced Micro Devices gained 1.45% on a multi-billion-dollar AI server deal with Anthropic. Brent crude touched $95 per barrel, while analysts warned that hyperscaler free cash flow could turn negative this quarter.

Alphabet reported robust second-quarter results on July 22, with revenue rising 24% year-on-year to $119.8 billion, beating analyst expectations of $117.02 billion. Operating profit climbed to $40.8 billion as the tech giant raised its full-year capital spending guidance to between $180 billion and $190 billion.

Google Cloud revenue surged 82% to $24.77 billion, far exceeding estimates of $22.46 billion, while the company's cloud backlog now stands at over $460 billion. Search revenue grew 17% to $63.27 billion, roughly in line with forecasts. However, free cash flow turned negative at -$5.9 billion for the quarter, and capital expenditure nearly doubled to $44.92 billion.

Analysts remain bullish on the stock, with BMO Capital raising its price target to $455 and Wedbush initiating coverage at $671. The consensus rating is 'Strong Buy' with an average price target of $433.98.

Google is developing a new server chip codenamed Frozen v2, designed to improve the operational efficiency of its Gemini AI models, with a targeted release in 2028.

The chip could process 6 to 10 times more tokens per unit of power than Google's existing tensor processing units, potentially offering a significant leap in energy efficiency for large-scale AI workloads. Alphabet's stock rose roughly 3% following the disclosure.

The move comes as major AI firms push to reduce reliance on third-party silicon. OpenAI announced its first custom chip, dubbed Jalapeño, in June, while Anthropic is in talks with Samsung over a chipmaking partnership. Custom hardware has become a strategic priority across the sector as companies race to control the infrastructure underpinning generative AI.