1. CapEx ahead of cash flow. Management raised 2026 CapEx guidance to $195 billion to $205 billion. The filings show the gap and how it was funded:
- Free cash flow was $10,116 million in Q1 and $(5,855) million in Q2.
- In Q2, operating cash flow was $39.1 billion against capital expenditures of $44.9 billion.
- June stock sales raised net proceeds of $49.6 billion; first-half debt issuance was $20.0 billion of dollar notes and $31.8 billion of foreign currency notes.
- Data center leases not yet commenced carry $85.2 billion of future payments, plus a short-term lease of about $5.8 billion starting in Q3.
2. Cloud growth and the backlog. Cloud revenue rose $11.1 billion, or 82% in Q2.
- Revenue backlog was $519.5 billion, of which $513.9 billion related to Google Cloud.
- Alphabet expects to recognize just over 50% of it over the next 24 months.
- The definition widened this year: backlog now includes contracts with an original term of one year or less.
- Q2 also brought the first revenue from TPU system supply agreements, with the significant majority to be recognized in 2027.
So does the backlog convert fast enough to cover a build-out now funded with new equity and debt?