Alphabet (GOOG) Reports Strong Growth Fueled by AI Demand and Cloud Revenue

Alphabet (GOOG) Reports Strong Growth Fueled by AI Demand and Cloud Revenue Soumya Eswaran Tue, September 1, 2026 at 4:53 PM GMT+2 3 min read GOOG ^GSPC DX-Y. NYB GOOG First Eagle Investment Management , an investment management company, released its Q2 2026 investor update for "First Eagle Global Fund".  The letter can be downloaded here .

Easing tensions in the Middle East led to a strong rally in risk markets in Q2. The S&P 500 Index rose 15. 2%, while the MSCI EAFE Index gained 10.

8%. Growth stocks outperformed, with the MSCI World Growth Index significantly exceeding value returns. A notable shift in U.

S. interest rate expectations followed Kevin Warsh's appointment as chair of the Federal Open Market Committee, pushing Treasury yields higher and strengthening the dollar. Despite the optimistic market environment, concerns about fiscal constraints and limited policy flexibility remain.

Tighter credit spreads and elevated equity valuations reflect strong demand for financial assets, with household wealth in equities at a post-WWII high. Earnings expectations are buoyant, driven by AI infrastructure developments. Against this backdrop, Global Fund A Shares returned 2.

86% in Q2 2026, with emerging markets and developed Europe as the primary contributors. Developed Asia (excluding Japan) was the only detractor, and Japan lagged. Information technology and financials led among equity sectors, while materials and energy detracted.

The fund underperformed relative to the MSCI World Index during this period. Also, check the fund's top five holdings to see its best picks in 2026. In its second-quarter 2026 investor letter, First Eagle Global Fund highlighted Alphabet Inc.

(NASDAQ: GOOG ) as a leading performance contributor. Alphabet Inc. (NASDAQ:GOOG), the parent company of Google, offers various platforms and services, including online search and advertising, cloud solutions, and artificial intelligence.

On August 31, 2026, Alphabet Inc. (NASDAQ:GOOG) closed at $335. 41 per share, reflecting a market capitalization of $4.

13 trillion. Alphabet Inc. (NASDAQ:GOOG) posted a one-month return of -11.

22%, while its shares gained 57. 19% over the past 52 weeks. First Eagle Global Fund stated the following regarding Alphabet Inc.

(NASDAQ:GOOG) in its Q2 2026 investor letter: "Shares of Alphabet Inc. (NASDAQ:GOOG)—the parent company of Google and YouTube—rose during the quarter as contracted future revenues from cloud operations continued to be strong, amplified by explosive demand for AI infrastructure, strong AI-focused memory chip production and resilient digital-ad sales. Google's full-stack AI solution underpins prospective long-term momentum for the company, with an anticipated near-term boost from hosting OpenAI's latest generative AI model.

" Story Continues Alphabet Inc. (NASDAQ:GOOG) ranks 7th on our list of  40 Most Popular Stocks Among Hedge Funds . As per our database, 195 hedge fund portfolios held Alphabet Inc.

(NASDAQ:GOOG) at the end of the second quarter, which was 201 in the previous quarter. While we acknowledge the potential of Alphabet Inc. (NASDAQ:GOOG) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk.

If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the  best short-term AI stock . In a previous article , we discussed Alphabet Inc. 's (NASDAQ:GOOG) first negative quarterly free cash flow, which raises questions about whether this indicates a prudent diversification of financing or a change in the financial profile of its strong cash generation due to adjustments in AI infrastructure.

In addition, please check out our hedge fund investor letters Q2 2026 page for more investor letters from hedge funds and other leading investors. READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years . Disclosure: None.

This article is originally published at Insider Monkey .