MOUNTAIN VIEW, July 23 — Alphabet, the parent company of Google, delivered second-quarter results on Tuesday that suggested years of heavy investment in artificial intelligence are starting to show up in the bottom line, with cloud revenue soaring 82 percent and total sales rising 24 percent.
The company reported quarterly revenue of $119.8 billion and operating income of $40.8 billion. Net income jumped 298 percent to $112.1 billion, lifted by a large gain on the rising value of its stake in AI lab Anthropic.
Google Cloud, the division that sells computing power and AI tools to businesses, generated $24.8 billion in the quarter, well ahead of analyst estimates. The cloud order backlog — contracted future revenue — reached $514 billion, underscoring how enterprise customers are locking in long-term commitments.
“AI is reshaping every part of our business,” Chief Executive Sundar Pichai said on the earnings call. Alphabet raised its full-year capital expenditure outlook by 8 percent and said it would continue increasing investment in data centers and chips.
The results stood in contrast to Tesla, which also reported quarterly figures on Tuesday. The electric-vehicle maker posted record revenue of $28.2 billion, up 26 percent from a year earlier, but adjusted earnings per share fell 18 percent to $0.33 — more than 35 percent below Wall Street forecasts.
Tesla’s operating profit plunged 57 percent to $398 million, less than a third of what analysts had expected. Free cash flow turned negative for the first time in two years, though the outflow was smaller than feared.
Chief Executive Elon Musk told investors that Optimus, the company’s humanoid robot, would be the most difficult product to scale. Executives reiterated that capital spending would exceed $25 billion this year and that growth should continue over the next two to three years.
Tesla shares fell more than 4 percent in after-hours trading, while Alphabet drifted lower despite the strong cloud numbers, as investors weighed the higher spending commitments across the tech sector.
Beyond the earnings duel, the AI arms race is intensifying. OpenAI said it would spend more than $30 billion to build its first company-designed data center in Georgia and launched Presence, an enterprise AI-agent platform. The startup has reportedly raised its total compute-spending forecast through 2030 from roughly $600 billion to $750 billion.
Chipmaker AMD separately announced a multi-billion-dollar supply deal with Anthropic and a $5 billion equity investment in the AI company, further cementing ties between cloud providers, chipmakers and model developers.
On Wall Street, the Nasdaq Composite closed down 0.57 percent, the S&P 500 slipped 0.14 percent and the Dow Jones Industrial Average was effectively flat. Nvidia rose more than 2 percent, while Meta, Tesla, Google, Amazon and Microsoft all declined.
For investors, the quarter is shaping up as a test of whether the massive capital flows into AI can translate into sustained profit growth — or whether the industry is entering a heavier-spending phase that will take longer to pay off.