The Information AM

Save 25% on an annual subscription to read the most important news about technology and business first. For even more, Save $250 on The Information Pro for unlimited access to our proprietary org charts, databases and surveys.

1.	Google Cloud Growth Drives Alphabet 24% Revenue Increase By Erin Woo Source: The Information

Alphabet’s revenue grew 24% year-over-year to $119.8 billion in the second quarter, driven by especially strong growth in Google’s cloud-computing unit.

Google Cloud’s revenue grew 82% year-over-year to $24.8 billion, outpacing the previous quarter’s 63% year-over-year growth, the company reported on Wednesday. Operating income growth in that division was even more dramatic, more than tripling to $8.8 billion, underlining the unit’s growing contribution to Google’s overall profits. Google said the cloud computing business had a $514 billion backlog as of the second quarter, reflecting contractual commitments from Google’s customers, up from $460 billion the previous quarter.

Google also increased its capital expenditure projection for full-year 2026 to $195 billion to $205 billion from $180 billion to $190 billion, which Chief Financial Officer Anat Ashkenazi said was to accelerate expansion of cloud capacity to meet growing demand. Google remains capacity constrained in its cloud business, meaning that there’s more demand for services than Google can meet, said Ashkenazi, who also reiterated that Google plans to increase its capex further next year.

In the earnings call, Pichai acknowledged that Google is behind on AI coding, although he said that isn’t the only AI application that businesses want. Google is focused on catching up on coding, Pichai said.

“There are areas where we’ve acknowledged we need to improve,” Pichai said. “Coding and agentic coding is an example of that, and I think the teams are very very focused on it.”

Alphabet shares were down about 4% in after-hours trading, after sliding during the earnings call.

Alphabet’s growth shows that despite questions over whether Google is falling behind in AI model development, its core businesses continue to gush cash, in part driven by customer demand for AI. Google Search, still the company’s main revenue driver, generated $63.3 billion in revenue, although its 17% year-over-year growth was slightly slower than the previous quarter. CEO Sundar Pichai said in the earnings statement release that demand for AI infrastructure and services drove Cloud growth.

Alphabet’s overall net profit nearly quadrupled, though that reflected in part a $99 billion gain from net unrealized gains on its equity securities. While the company didn’t specify the investments, the gain is likely driven by Alphabet’s positions in SpaceX and Anthropic.

For the first time in the second quarter, Google delivered its AI chips, tensor processing units, to customer data centers. TPUs represent a burgeoning new business line as Google starts to compete with Nvidia on chips. Most of the revenue from TPU delivery will come in 2027, Ashkenazi said.

2.	AMD to Invest Up to $5 Billion in Anthropic, Strikes Chip Deal By Amir Efrati Source: The Information

Advanced Micro Devices said Wednesday it would make an equity investment of “up to $5 billion” in Anthropic “in the future,” and the Claude AI maker would use AMD’s AI server chips starting next year. Anthropic has been steadily diversifying its AI server sources and is evaluating chips from other providers including startups and Microsoft, The Information has reported.

AMD implied that Anthropic would agree to purchase a substantial number of its server chips, which would eventually consume up to 2 gigawatts of power, and their announcement also implied AMD would purchase access to Claude models to help it design better chips. AMD shares rose 2% and have already risen nearly 150% this year.

AI developers OpenAI and Meta also have announced agreements to use AMD chips, though it isn’t clear how much they will end up using or when. AMD’s stock has surged as numerous cloud providers purchase its hardware to diversify from Nvidia’s. However, Nvidia is nearly seven times bigger than AMD in revenue and is growing its revenue about 30 percentage points faster than AMD (while also experiencing accelerating sales), underscoring the gap in performance.

Besides Google’s DeepMind, Anthropic is one of the other major AI developers that doesn’t heavily rely on chips from AMD rival Nvidia; it has developed its models using chips from Google and Amazon, for instance. But even Anthropic has started paying billions of dollars a year for Nvidia chips as it races to get more computing capacity to meet customer demand. Anthropic’s private valuation is nearly $1 trillion, meaning the AMD investment would represent about 0.5% of Anthropic shares at the current price. Anthropic has filed to go public as soon as this fall. This post has been updated to clarify the investment would be up to $5 billion.

3.	Tesla’s Revenue Climbed 26% in the Second Quarter By Grace Kay Source: The Information

Tesla’s revenue jumped 26% year over year in the second quarter, boosted by its vehicle deliveries and the company’s energy business.

Even as the company generated more cash from its day-to-day business, it spent heavily on new manufacturing capacity and AI projects, sending its free cash flow into the negative. Tesla’s capital expenditures more than doubled from a year earlier to nearly $5.8 billion.

In its quarterly presentation, Tesla said it had started production of the Cybercab at its factory in Austin, Texas and is in the process of continuing its Robotaxi expansion into Las Vegas, Nevada, and Phoenix, Arizona, after releasing the service in two new Florida cities on Tuesday.

The company also said it had begun installing production lines for its Optimus humanoid robot in its Fremont Factory after decommissioning Model S and Model X manufacturing lines earlier this year.

4.	ServiceNow Reports Accelerating Second Quarter Growth By Martin Peers Source: The Information

Enterprise software firm ServiceNow’s second quarter revenue growth accelerated a couple of percentage points to 24%, the company reported Wednesday, thanks in part to strong demand from the federal government that pulled some business into the second quarter from the third quarter.

One result of that shift is that ServiceNow projected a slowdown in third quarter growth in subscription revenues—by far the biggest part of its business—to 20.5% in the third quarter from 24.5% in the second quarter. For the full year, though, the company narrowed its full year subscription revenue growth projection to 22.5%, which was the high end of a range it gave earlier this year.

That suggests ServiceNow isn’t yet being affected by AI competition. ServiceNow also reported a 16% increase in free cash flow to $634 million, on revenue of $3.98 billion.

5.	IBM Cuts Revenue Target as AI Eats Into Its Sales By Aaron Holmes Source: The Information

IBM on Wednesday said it was reducing its full-year projection for revenue growth to between 4% and 5% this year compared to an earlier forecast of more than 5% growth.

The lowered forecast came during the company’s quarterly earnings report, which showed sluggish sales growth. The company first warned shareholders about the slowdown last week.

IBM’s revenue in the second quarter rose 1% to $17.2 billion, with revenue in its data center mainframe unit down 7% and revenue in its software business up 5%. The company, which makes the bulk of its revenue from software sales, attributed the weak growth to customers spending more on AI. The Information has previously reported about this shift in corporate budgets, as companies make up for spending on AI by reducing spend on other software.

IBM shares fell 25% last week when it disclosed its slowing growth but rose around 2% on Wednesday after it reported earnings.

During the company’s earnings call Wednesday, CEO Arvind Krishna said IBM is confident that it will see rising demand for its technology but that it failed to close several large deals it was expecting in the last quarter, in part because customers were spending money on other AI-related products.

“It comes down to execution. That is where we fell short in the second quarter,” Krishna said. He added that the company will aim to accelerate sales by hiring more forward deployed engineers while using AI to cut costs and “accelerate productivity” in its sales organization.