Gene Munster Sees GOOGL Q2 Cloud Revenue Jump Over 65% Ahead Of Estimates — But Traders Eye Capex

• Analysts, on average, are expecting Q2 cloud growth of 63% year-on-year, similar levels to Q1. 
• In contrast, Amazon and Microsoft’s cloud revenue is expected to grow 32% and 40% in Q2.
• Retail sentiment on Stocktwits for GOOGL was 'extremely bullish' on Wednesday ahead of the company's second-quarter earnings report after the closing bell.

Alphabet (GOOG, GOOGL) shares held their ground on Wednesday, rising about 0.3% ahead of the company's second-quarter results due after the closing bell, as investor focus appeared to shift from cloud revenue to its capital expenditure outlook.

As Alphabet kicks off the second-quarter tech earnings season on Wednesday, investors are primarily focused on recent capital expenditure trends and any changes to the company's 2026 and 2027 outlook. Peers Microsoft (MSFT), Amazon (AMZN), and Meta (META) are scheduled to report next week.

While capex appears to be the key metric for tech and AI investors this earnings season, cloud revenue remains one of the fastest-growing revenue streams for Alphabet and its tech peers.

Google’s cloud business saw a record revenue growth of 63% in the quarter ending March 2026, which Gene Munster thinks can very well exceed 65% this quarter. Cloud revenues contribute about 15% to total Alphabet revenues.

Alphabet Q2 Results Preview, Cloud And Capex Trends

Alphabet’s second-quarter revenue is expected to rise over 21% to $117 billion and adjusted income to increase 26% to $2.91 per share, according to estimates from Koyfin.

Google’s search business is expected to hit $63.4 billion from $54.19 billion last year, according to StreetAccount. YouTube advertising revenue and cloud are estimated to reach $10.8 billion and $22.3 billion, respectively, from $9.8 billion and $13.62 billion a year ago. 

Alphabet has capex plans of nearly $190 billion for 2026 and is expected to “significantly rise” in 2027, Finance chief Anat Ashkenazi said in April. While Alphabet’s management has yet to provide a number for its 2027 capex spending plans, Citi thinks capex levels can breach $300 billion in 2027. 

Big Tech Earnings: Cashflows Are Important Too

As spending on data centers to fuel large-scale AI plans is set to increase for most tech players, there is a risk that spending far exceeds cash flows generated.

 Data from LSEG showed that hyperscalers Microsoft (MSFT), Alphabet (GOOG), Amazon (AMZN), ‌Meta Platforms (META) and Oracle (ORCL)  will generate about $340 billion more in annual operating cash flow in 2027 than in 2025, but capex is expected to rise by roughly $534 billion.

Therefore, the focus will equally remain on revenue streams, considering the blowout expenditures hyperscalers plan to make. 

GOOGL Stock: Retail View 

Retail sentiment for GOOGL was ‘extremely bullish’ with ‘high’ message volumes. Retail chatter on the stock has jumped 62% ahead of earnings. 

GOOGL stock has gained 11.4% year-to-date. 

Read More: AMZN Stock Drops For Second Day — Amazon Reportedly Cuts Jobs In Artificial General Intelligence Unit Amid Strategic Realignment

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