Alphabet (NASDAQ: GOOGL | GOOGL Price Prediction) and Amazon (NASDAQ: AMZN) both reported Q2 FY2026 results shaped by the same force: the enormous check every hyperscaler now writes to NVIDIA (NASDAQ: NVDA). Google Cloud grew 82% YoY. AWS grew 37%. Both burned free cash. The difference is who owns the silicon underneath.
Google Cloud Sprints. AWS Accelerates. Capex Bills Diverge.
Alphabet spent $44.92 billion on capex last quarter and pushed cloud operating margin to 35.6%. Amazon spent more, $54.21 billion, and AWS operating margin was 39.4%. AWS earns more per dollar of cloud revenue today, but Google Cloud scales faster off a smaller base while running Gemini on in-house TPUs. Sundar Pichai told investors “our first priority is making sure we are allocating what we need to compete at the frontier”, then routing external customers to a mix of TPUs and NVIDIA GPUs.
| Business Driver | Alphabet | Amazon |
| Q2 Capex | $44.92B | $54.21B |
| Cloud Growth | 82% | 37% |
| Custom Silicon | TPU (trains and serves Gemini) | Trainium2, Graviton5 |
| Operating Margin | 34% | 13.7% |
Full Stack vs. Foundation Marketplace
Alphabet designs the chip, trains the model, ships the app. Gemini processes 22 billion API tokens per minute, the Gemini App has 950 million monthly active users, and nearly 90% of the Fortune 100 uses Gemini Enterprise. Every incremental token trained on a TPU is a token not rented from Jensen Huang.
Amazon executes differently. Andy Jassy said “our AI and Chips businesses each eclipsed run rates of more than $25 billion”, and Project Rainier now runs 500,000+ Trainium2 chips for Anthropic. But Bedrock is a hosting layer for other people’s frontier models, including GPT-5.6 and Claude Opus 5, and AWS still buys NVIDIA GPUs at scale because enterprise customers demand them.
The Balance Sheet Is Where This Gets Real
Google’s free cash flow fell to negative $5.86 billion, long-term debt jumped from $46.5B to $98.2B, and buybacks were suspended. Alphabet raised full-year 2026 capex guidance to $195 billion to $205 billion. Amazon guided higher at roughly $200 billion, and TTM free cash flow turned negative at -$7.6 billion. Google’s saving grace is a 54.8% profit margin and forward P/E of 17, versus Amazon’s forward P/E of 32.
Why I Lean Toward Alphabet on the NVIDIA Tax
Ranking the Mag 7 by structural insulation from NVIDIA’s pricing power, Alphabet ranks first and Amazon a clear second. A wide chasm separates that pair from Microsoft, Meta, Apple, and Tesla, all lean harder on merchant GPUs. Alphabet owns the whole stack from Axion CPU to Gemini app, and it shows up in 86% one-year price appreciation. Amazon’s Trainium ramp is real. I just think Google keeps more of every AI dollar it earns. If NVIDIA’s next Blackwell cycle prices harder, Alphabet feels it least.
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