Financial Report Outlook | Alphabet (GOOGL.US) kicks off the "seven giants" Q2 financial report season Can the billion-dollar AI gamble pay off?

Alphabet Inc. Class C's parent company, Alphabet (GOOGL.US, GOOG.US), will release its second-quarter financial report after the U.S. stock market closes on July 22nd (Wednesday). Tesla, Inc. (TSLA.US) will also announce its performance on the same day, marking the beginning of the earnings season for the seven tech giants in the U.S. stock market. As one of the largest "super cloud service providers" for global AI infrastructure investments, Alphabet's performance and capital expenditure guidance are seen as key indicators of global AI trading trends. The current expectations for the U.S. AI sector show clear differentiation, with the market shifting from the previous narrative of "shortage of computing power" to "concerns of excess production capacity." Investors are highly alert to whether Alphabet will signal a reduction in AI investment budget, as any such adjustment could trigger chain reactions throughout the entire AI industry chain. In terms of performance, the market is currently expecting Alphabet's Q2 revenue to be $116.98 billion, a 21% year-on-year increase; earnings per share to be $2.91, a 26% year-on-year increase. While Alphabet's profit in the previous quarter significantly exceeded expectations, it included a significant amount of non-operating investment income. The market expects this financial report to provide a clearer path for core business growth. Search and cloud business remain Alphabet's core growth drivers. According to Zacks' data, the market expects Q2 advertising revenue to be $81.68 billion, a 14.5% year-on-year increase; cloud business revenue to be $22.79 billion, a 67.3% year-on-year increase. The biggest question in the market is: Will the trillion-dollar bet pay off? The market's core concern revolves around the alignment between Alphabet's unprecedented scale of AI capital expenditures and the return on investment. The company has raised its full-year capital spending limit to $190 billion for 2026, and management has indicated that the capital spending scale for 2027 will increase significantly from this year's level. Unlike peers such as Microsoft Corporation and Meta, whose revenue and profits did not improve synchronously after increasing capital spending, Alphabet's high investment in the first quarter has already yielded revenue and profit margin growth. Data shows that Alphabet's first-quarter revenue was $109.9 billion... --- Translation is done up to this point. If you'd like more translated, please let me know.