Alphabet Beats Q2 Earnings Expectations, but Shares Fall on Higher Capital Spending

Alphabet, the parent company of Google, reported second-quarter earnings after the closing bell, beating Wall Street expectations on both revenue and earnings as Google Cloud revenue surged 82% year over year, Daniel Howley reported for Yahoo Finance.

Alphabet exceeded earnings expectations, but investors reacted negatively to higher capital spending plans. [Photo: Anthony Quntano Flickr]

For the quarter, Alphabet reported earnings per share (EPS) of $9.11 on revenue of $119.8 billion. Analysts had expected EPS of $2.95 and revenue of $116.9 billion.

Despite the strong results, the company announced it was increasing its projected capital expenditures (CapEx) for the year to between $195 billion and $205 billion, up from its previous forecast of $180 billion to $190 billion.

Analysts had expected annual capital expenditures of approximately $186.4 billion.

Alphabet shares fell 4.5% in premarket trading at one point in the week following the announcement, as investors focused on the company's higher spending plans.

Google Cloud generated $24.77 billion in revenue, exceeding analysts' expectations of $24.56 billion and rising sharply from $13.6 billion a year earlier. Advertising revenue totaled $81.63 billion, slightly above analysts' estimate of $81.12 billion.