Will Anthropic Boost Alphabet’s Earnings to the Stratosphere?
Alphabet's Q2 report arrives Wednesday carrying an Anthropic-sized wildcard that could produce the most misleading headline EPS in the company's history, and knowing which numbers to ignore matters as much as knowing which ones to watch.
Investors are watching Alphabet (NASDAQ:GOOG | GOOG Price Prediction) 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.
An Anthropic Windfall Waiting to Land
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.
Consensus Estimates
| Metric | Consensus Growth (YoY) |
|---|---|
| Q2 2026 Revenue | ~21% |
| Q2 2026 EPS | ~32% |
| Q2 2025 Revenue (baseline) | $96.43B |
| Q2 2025 EPS (baseline) | $2.31 |
| BofA Q2 2026 EPS (Anthropic-boosted) | $8.38 |
Look Past the Anthropic Mark to the Real Business
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.
Third, capex discipline. Alphabet already raised 2026 capex to $180 to $190 billion and flagged 2027 will “significantly increase”. Free cash flow fell 46.63% YoY in Q1. Another downdraft could pressure the stock even with a blowout headline.
Search matters too. AI Overviews drove 19% Search growth last quarter, and any deceleration would revive competitive fears.
A Print That Needs a Translator
This quarter will hand Alphabet a spectacular headline number thanks to Anthropic, and a possible October Anthropic IPO could push the valuation higher still. But the market has already seen this movie. Prediction markets assign a 97.4% probability of a beat. What will actually move the stock is whether cloud growth reaccelerates and capex stays productive. That is the report inside the report.
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After two decades of patrolling the dark corners of suburbia as a police officer, Rich Duprey hung up his badge and gun to begin writing full time about stocks and investing. For the past 20 years he’s been cruising the markets looking for companies to lock up as long-term holdings in a portfolio while writing extensively on the broad sectors of consumer goods, technology, and industrials. Because his experience isn’t from the typical financial analyst track, Rich is able to break down complex topics into understandable and useful action points for the average investor. His writings have appeared on The Motley Fool, InvestorPlace, Yahoo! Finance, and Money Morning. He has been featured in both U.S. and international publications, including MarketWatch, Financial Times, Forbes, Fast Company, and USA Today.
