Google is Not Losing the AI Race, Pichai Tells Doubters as Cloud Jumps 82%
The Alphabet chief conceded Google has ground to make up on coding, even as Q2 revenue hit $119.8bn and 2026 capex climbed again.
July 23, 2026 – 7:49 am
Image by: WEF/Greg Beadle
During Alphabet’s Wednesday earnings call, Sundar Pichai did something he is not used to doing: arguing that Google is not, in fact, falling behind in artificial intelligence.
Analysts wanted to know why the next Gemini model had slipped and whether the company had quietly ceded the frontier to OpenAI and Anthropic.
"We’ve had clearly frontier models," Pichai said. "There are many attributes on which we are still at the frontier; there are areas where we’ve acknowledged we need to improve and coding and agentic coding is an example of that."
For a company that likes to remind everyone it invented the transformer, the admission was unusually candid.
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The Remarks Answered a Run of Pointed Questions from JPMorgan’s Doug Anmuth and Barclays’ Ross Sandler
Who pressed him on a delayed Gemini Pro and a release schedule that has trailed rivals. Google’s next Pro model is months behind schedule, and coding is exactly the ground on which OpenAI’s Codex and Anthropic’s Claude have been peeling off developers.
Pichai’s answer was to promise more, and sooner. He said Google had begun its most ambitious pre-training run yet for Gemini 4, told analysts "I think people will be pleased" when it lands, and signalled that future models would arrive at close to a monthly cadence.
He also leaned on demand as evidence that the doubters had it wrong. Google remains "supply constrained," Pichai said, which he cast as a sign of momentum rather than strain.
Gemini models now process 22 billion API tokens a minute, and nearly 500 cloud customers have each run more than a trillion tokens over the past year.
The Figures Underneath the Argument Were Strong
Alphabet posted revenue of $119.8 billion for the quarter, up 24% on a year earlier, while Google Cloud grew 82% to $24.8 billion, comfortably ahead of the roughly 64% analysts had pencilled in. Cloud backlog reached $514 billion.
Advertising, still the engine, did its share alongside cloud. YouTube brought in $11.06 billion in ad revenue, up from $9.79 billion a year earlier, and the wider advertising business kept growing even as search shifted towards AI-generated answers.
Consumer numbers held up too. The Gemini app hit 950 million monthly active users, its daily total tripling over the past year, and nearly 90% of the Fortune 100 now run Gemini Enterprise.
Google’s full-stack bet, from custom chips to models to agents, is the version of events Pichai would like investors to read.
Net income came in at a startling $112.1 billion, though most of that was an unrealised gain on Alphabet’s stake of roughly 14% in Anthropic, whose valuation tripled during the quarter.
What unsettled the market was spending. Alphabet lifted its 2026 capital expenditure guidance by about $15 billion, to between $195 billion and $205 billion, extending a year of record AI capex across.