Strong Google Q2 Earnings Power QQQ to New Highs

Shares of Alphabet Inc. (GOOG, GOOGL) climbed Thursday after the company reported stronger-than-expected second-quarter results. In turn, major tech-heavy exchange-traded funds like the Invesco QQQ Trust (QQQ) rose as well.

Alphabet was last trading up about 2% midday Thursday, nearing its all-time high of just over $206 reached in January. At its session high of nearly $198, the stock was only 4% off that record.

The rally helped boost QQQ, even though Alphabet itself has underperformed in 2025. The stock is up 2.4% year to date, trailing both QQQ, which is up 10.9%, and the Communication Services Select Sector SPDR Fund (XLC), which has gained 13.6%. 

While Alphabet is often thought of as a tech company, it’s classified in the communication-services sector under the Global Industry Classification Standard (GICS).

Google Beats Estimates

The Google parent reported earnings per share of $2.31 for Q2, topping analyst estimates of $2.18. Revenue came in at $81.7 billion, beating expectations of $79.6 billion and marking a 14% year-over-year increase. Investors were particularly encouraged by a nearly 12% rise in search revenue, a signal that concerns over AI-powered chatbots disrupting Google’s core business may have been overstated.

Google has been aggressively evolving its search platform in the AI era, incorporating features like “AI Overviews” and a chatbot-style search mode. It also continues to promote its Gemini chatbot, which competes directly with OpenAI’s ChatGPT. On the earnings call, CEO Sundar Pichai noted that Gemini now has more than 450 million monthly active users. That still lags ChatGPT, which is estimated to have between 800 million and 1 billion users, but it shows Google is holding its own in the race.

Cloud Business Sees the Light 

Meanwhile, Google Cloud continued to impress, with revenue growing 32% year over year, another sign of robust demand for AI infrastructure. That demand is fueling a surge in capital expenditures. Alphabet raised its capex estimate for 2025 to $85 billion, up from a previous estimate of $75 billion. The jump initially spooked investors, but the stock rebounded as it became clear that the increase was a result of massive demand for Google's cloud services.

That rise in AI-related spending also lifted shares of semiconductor stocks like Nvidia Corp. (NVDA) and Broadcom Inc. (AVGO), which supply key components for AI servers and data centers. Both were trading near record highs on Thursday.

Pichai emphasized that Alphabet’s heavy investment in AI is bearing fruit: “We are leading at the frontier of AI and shipping at an incredible pace. AI is positively impacting every part of the business, driving strong momentum.”

As Alphabet’s AI strategy gains traction, tech and communication services ETFs could continue to benefit.