Google’s latest earnings call offered a familiar message: AI is driving growth and also getting more expensive.

On Wednesday, Alphabet reported second-quarter revenue of $119.8 billion, up 24% from a year earlier, while Google Cloud posted another successful quarter as businesses rushed to adopt AI. At the same time, executives made clear that the company is willing to spend even more to meet growing demand.

Here are the three biggest takeaways from Alphabet’s earnings.

Google spends more on AI and is willing to sacrifice margins

Google is prioritizing long-term AI growth over short-term profitability by doubling down on its AI development.

The company raised its 2026 capital spending forecast to between $195 billion and $205 billion, up from a previous outlook of up to $190 billion, saying demand for AI infrastructure continues to outstrip available capacity.

Chief Financial Officer Anat Ashkenazi said during Wednesday’s earnings call that the higher spending reflects an accelerated deployment of computing capacity.

Google also plans to lean more on third-party cloud providers as it builds out its own infrastructure, a strategy that Ashkenazi said will create “modest margin pressure in the near term” but will help the company “continue to grow our customer base and capture greater overall value.”

Google Cloud is becoming the company’s AI growth engine

Search remains Google’s biggest business, but the cloud is increasingly becoming its main AI growth driver.

During the second quarter, Google Cloud again delivered the strongest performance across all of Alphabet’s businesses.

Revenue rose 82% year over year to $24.8 billion, well above analyst expectations, while the cloud backlog hit $514 billion, highlighting continued demand from companies building AI applications.

“We’re still in a tight supply environment,” Ashkenazi said, adding that Google is seeing “very strong demand from both external cloud customers and the entire business.”

About 60% of Google’s infrastructure spending during the quarter went to AI servers, with the rest invested in data centers and networking equipment.

Google’s Gemini app moves closer to ChatGPT

Google’s AI Assistant is approaching a milestone, signaling that Google’s consumer AI strategy is gaining momentum amid intensifying competition from OpenAI and Anthropic.

The company said during Wednesday’s earnings call that the Gemini app now has 950 million monthly active users, up from 650 million last October and more than 750 million earlier this year. CEO Sundar Pichai also said during the earnings call that daily active users have tripled over the past year.

That puts Gemini within striking distance of OpenAI’s ChatGPT, which recently reached roughly 1 billion monthly users.

Google is also trying to make its AI models cheaper to run. This week, it introduced three new Gemini models, including Gemini 3.6 Flash, which the company says improves encoding performance while using fewer tokens, reducing the cost of deploying AI applications.