Alphabet and IBM show diverging revenue trends in AI sector

Two earnings reports. Two very different stories about where the AI money is actually going. Alphabet reported Q2 2026 revenue of $119.8B, a 24% jump year-over-year. IBM reported revenue of roughly $17.2B for the same quarter, up just 1% from a year ago. Google Cloud is eating enterprise budgets The number that stands out in Alphabet’s report is Google Cloud, which grew 82% year-over-year to approximately $24.8B in Q2 2026. To put that in context: Google Cloud alone generated more quarterly revenue than IBM’s entire global business. Alphabet’s cumulative capital expenditure forecast now exceeds $200B, reflecting how aggressively the company is betting on AI infrastructure capacity. IBM’s quarter tells a more complicated story IBM’s software segment grew 5% in Q2 2026. The problem is the infrastructure segment, which declined 7%. That decline reflects a broader corporate budgeting shift: enterprise IT departments are pulling spending away from legacy hardware and on-premises systems and redirecting it toward cloud-based AI services. CEO Arvind Krishna pointed to quantum computing as a longer-horizon growth driver during the earnings period, with IBM anticipating revenue contribution...