2Q Preview: Raising estimates for Cloud strength, offset slightly by FX; Buy

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2Q Preview: Raising estimates for Cloud strength, offset slightly by FX; Buy

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2Q Preview: Raising estimates for Cloud

strength, offset slightly by FX; Buy

Reiterate Rating: BUY | PO: 430.00 USD | Price: 370.92 USD

Expecting a strong 2Q with likely Cloud upside 16 July 2026

Reports 7/22. Checks suggest strong retail search growth, with some softness in CPG & Equity

travel, and are modestly lowering our search ests for FX, but remain slightly above Street

at 17% growth. We are raising our Cloud growth est. to 70% given strong demand

Key Changes

indicators and backlog that suggests at least $230bn in revs. over next 8 quarters, and

we think 70% is close to Street expectations. We expect 2Q rev/EPS of $102.1bn/$8.38 (US$) Previous Current

vs Street $101.0bn/$2.90. We estimate an $80bn benefit to 2Q OI from Anthropic stake 2026E EPS 14.43 19.70

revaluation (Anthropic’s valuation increased from $380bn in 1Q to $965bn in 2Q). 2027E EPS 14.49 14.70

2028E EPS 17.62 18.12

2026E DPS 0.67 0.72Raising estimates reflecting higher Cloud growth

We raise ests. for higher Cloud revenues and Anthropic asset appreciation, offset by US$

depreciation in 2Q and a higher share count (recent capital raise). For 2026, we raise net

revenue by 1% to $427bn and EPS by 36% to $19.70. We now expect 16% full year Justin Post

Research Analyst

search growth and 72% Cloud growth. For 2027, we raise net revenue by 3% to $537bn BofAS

& EPS by 1% to $14.70. Our estimates assume $290bn of Cloud revenues from 2Q’26- +1justin.post@bofa.com415 676 3547

1Q’28, above backlog at $230bn as recent revs. have come in higher than commitments. Nitin Bansal, CFA

BofASKey for call: 3Q comments, backlog & capex commentary +1 415 676 3551