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Alphabet Rides on Google Services Growth: Can It Beat META & AAPL?
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Key Takeaways
Alphabet's Google Services revenues rose 15% year over year to $94.5 billion in Q2 2026.
AI Mode topped 1 billion monthly active users, driving incremental Search queries for Alphabet.
YouTube ad revenues climbed 13% to $11.1 billion, while subscriptions supported Alphabet's growth.
Alphabet (GOOGL - Free Report) is benefiting from strong momentum across Google Services, supported by robust Search, YouTube, and subscription growth. This strengthens the company’s competitive position against Meta Platforms (META - Free Report) and Apple (AAPL - Free Report) .
In the second quarter of 2026, Google Services revenues increased 15% year over year to $94.5 billion, driven by 17% growth in Google Search & other, 15% growth in subscriptions, platforms and devices and 13% growth in YouTube advertising revenues. Google Services operating income also rose 20% to $39.5 billion, with margin reaching 41.8%, highlighting solid profitability alongside revenue expansion.
AI integration is strengthening Search engagement and monetization. In the second quarter of 2026, AI Mode has surpassed 1 billion monthly active users and is driving incremental Search queries. Gemini is also being integrated across the advertising infrastructure to improve query understanding and ad relevance. Advertisers using AI-powered campaigns such as AI Max or Performance Max are seeing an average 15% increase in conversions or conversion value at a similar return on ad spend.
YouTube is another key growth driver. Advertising revenues increased 13% to $11.1 billion, while YouTube Music and Premium supported strong subscription growth. Google subscriptions, platforms and devices revenues increased 15% to $12.91 billion, aided by Google One and demand for AI plans.
Continued AI integration across Search, YouTube and subscriptions should support Google Services growth and help Alphabet strengthen its competitive standing against Meta Platforms and Apple. Management expects Google Services to continue benefiting from AI-driven improvements to the user and advertiser experience in the second half of 2026.
How Competitors Fare Against GOOGL
Meta Platforms is challenging Alphabet through its AI-powered recommendations and advertising tools across Facebook, Instagram, WhatsApp and Threads. Its massive user base and AI-driven ad infrastructure make it a major rival to Alphabet for digital advertising budgets and consumer engagement.
In the second quarter of 2026, Meta Platforms' advertising revenues increased 27% year over year to $59.4 billion. AI-powered recommendations and ad-ranking enhancements are improving advertiser performance, while Advantage+ solutions surpassed a $75 billion annual revenue run rate. With 3.6 billion daily users across its apps, Meta Platforms offers advertisers substantial reach.
Apple competes with Alphabet across subscriptions, digital content and consumer AI. In the third quarter of fiscal 2026, Apple’s services revenues reached a record of $30.7 billion, up 12% year over year, led by records across cloud, payments, advertising, App Store and video. Paid subscriptions surpassed 1.5 billion, supported by record transacting and paid accounts. Privacy-focused AI is also expected to become a new Services growth driver as heavy AI users may eventually upgrade to higher-tier iCloud+ subscriptions to support expanded compute needs.
Alphabet shares have risen 9% year to date, underperforming the broader Zacks Computer and Technology sector’s growth of 21.3%.
GOOGL Stock Performance
Image Source: Zacks Investment Research
GOOGL stock is trading at a premium, with a forward 12-month price/sales of 8.06X compared with the broader Computer and Technology sector’s 6.14X. Alphabet has a Value Score of D.
GOOGL Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2026 earnings is pegged at $20.55 per share, which has increased 0.24% over the past 30 days. This suggests 90.10% growth from 2025’s reported figure.
View the Zacks #1 Rank List
Image: Bigstock
Alphabet Rides on Google Services Growth: Can It Beat META & AAPL?
Key Takeaways
Alphabet (GOOGL - Free Report) is benefiting from strong momentum across Google Services, supported by robust Search, YouTube, and subscription growth. This strengthens the company’s competitive position against Meta Platforms (META - Free Report) and Apple (AAPL - Free Report) .
In the second quarter of 2026, Google Services revenues increased 15% year over year to $94.5 billion, driven by 17% growth in Google Search & other, 15% growth in subscriptions, platforms and devices and 13% growth in YouTube advertising revenues. Google Services operating income also rose 20% to $39.5 billion, with margin reaching 41.8%, highlighting solid profitability alongside revenue expansion.
AI integration is strengthening Search engagement and monetization. In the second quarter of 2026, AI Mode has surpassed 1 billion monthly active users and is driving incremental Search queries. Gemini is also being integrated across the advertising infrastructure to improve query understanding and ad relevance. Advertisers using AI-powered campaigns such as AI Max or Performance Max are seeing an average 15% increase in conversions or conversion value at a similar return on ad spend.
YouTube is another key growth driver. Advertising revenues increased 13% to $11.1 billion, while YouTube Music and Premium supported strong subscription growth. Google subscriptions, platforms and devices revenues increased 15% to $12.91 billion, aided by Google One and demand for AI plans.
Continued AI integration across Search, YouTube and subscriptions should support Google Services growth and help Alphabet strengthen its competitive standing against Meta Platforms and Apple. Management expects Google Services to continue benefiting from AI-driven improvements to the user and advertiser experience in the second half of 2026.
How Competitors Fare Against GOOGL
Meta Platforms is challenging Alphabet through its AI-powered recommendations and advertising tools across Facebook, Instagram, WhatsApp and Threads. Its massive user base and AI-driven ad infrastructure make it a major rival to Alphabet for digital advertising budgets and consumer engagement.
In the second quarter of 2026, Meta Platforms' advertising revenues increased 27% year over year to $59.4 billion. AI-powered recommendations and ad-ranking enhancements are improving advertiser performance, while Advantage+ solutions surpassed a $75 billion annual revenue run rate. With 3.6 billion daily users across its apps, Meta Platforms offers advertisers substantial reach.
Apple competes with Alphabet across subscriptions, digital content and consumer AI. In the third quarter of fiscal 2026, Apple’s services revenues reached a record of $30.7 billion, up 12% year over year, led by records across cloud, payments, advertising, App Store and video. Paid subscriptions surpassed 1.5 billion, supported by record transacting and paid accounts. Privacy-focused AI is also expected to become a new Services growth driver as heavy AI users may eventually upgrade to higher-tier iCloud+ subscriptions to support expanded compute needs.
GOOGL’s Share Price Performance, Valuation & Estimates
Alphabet shares have risen 9% year to date, underperforming the broader Zacks Computer and Technology sector’s growth of 21.3%.
GOOGL Stock Performance
Image Source: Zacks Investment Research
GOOGL stock is trading at a premium, with a forward 12-month price/sales of 8.06X compared with the broader Computer and Technology sector’s 6.14X. Alphabet has a Value Score of D.
GOOGL Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2026 earnings is pegged at $20.55 per share, which has increased 0.24% over the past 30 days. This suggests 90.10% growth from 2025’s reported figure.
Alphabet Inc. Price and Consensus
Alphabet Inc. price-consensus-chart | Alphabet Inc. Quote
Alphabet currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.