Alphabet's (GOOG) Anthropic stake surged to ~$135 billion, prompting BofA to forecast Q2 EPS of $8, nearly triple the Street consensus.
Google Cloud grew 63% last quarter but was supply-constrained, while free cash flow fell 47% YoY as 2026 capex climbs toward $190 billion.
Prediction markets already price a 97% beat probability, meaning cloud reacceleration and capex productivity will be the true stock movers Wednesday.
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Investors are watching Alphabet (NASDAQ:GOOG) ahead of its Q2 2026 results due Wednesday, July 22, after the bell. With shares near $355 and Anthropic's valuation exploding, this report could scramble how investors read the numbers.
Last quarter set a high bar. Alphabet posted an EPS beat of 94.1%, with $5.11 versus $2.63 expected, while revenue climbed 21.79% YoY to $109.9 billion. Google Cloud grew 63% to $20 billion, and backlog nearly doubled to $462 billion.
Since then, the story has taken an even bigger turn. Alphabet holds roughly 14% of Anthropic, a stake worth approximately $135 billion at Anthropic's latest $965 billion valuation. At the end of Q1, Anthropic was marked at $380 billion. Bank of America estimates the markup will drive roughly $80 billion in unrealized gains this quarter, prompting the firm to forecast EPS of $8.38, well above the Street.
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I'll be reading right past the headline EPS. A markup this large is a one-off accounting event, and investors still need to treat it that way, since it otherwise won't give a clear picture of how the underlying business is performing. The real signal sits in Google Cloud, where Anthropic is a major TPU customer.
You should watch three things. First, cloud growth. Last quarter's 63% YoY print came with CFO Anat Ashkenazi admitting "our cloud revenue would have been higher if we were able to meet the demand". Any acceleration off the $20 billion base tells you TPU capacity is catching up.
Second, backlog. The $462 billion cloud backlog nearly doubled QoQ, and management expects just over 50% to convert to revenue within 24 months. Another leap would confirm the AI infrastructure thesis.
Source: Yahoo Finance Top News — This article was automatically imported from the source. Read full article at original source →
