GOOGL · 10-Q · 2026Q2 · Full report

Gross Margin Drivers

Alphabet Inc. · 2026-07-23 · Importance 46 · Surprise 22 · Matches filing data

Second-quarter cost of revenues increased $6.9 billion year over year to $45.9 billion, including a $5.4 billion increase in other cost of revenues and a $1.5 billion increase in traffic acquisition costs. Other cost of revenues rose because of higher depreciation, inventory and hardware costs, YouTube content acquisition costs, and technical infrastructure operating costs. TAC increased with revenue subject to TAC, but the TAC rate declined from 20.6% to 19.8% because revenue shifted from Google Network properties toward Google Search & other properties. Six-month cost of revenues increased $11.8 billion to $87.2 billion, with other cost of revenues up $8.9 billion and TAC up $3.0 billion.

Key facts

• Total cost of revenues was $45.9 billion for the three months ended June 30, 2026, an increase of $6.9 billion year over year. source
• TAC was $16,179 million for the three months ended June 30, 2026. source
• Other cost of revenues was $29,764 million for the three months ended June 30, 2026. source
• Cost of revenues increased $6.9 billion from the three months ended June 30, 2025 to the three months ended June 30, 2026 due to an increase in other cost of revenues and TAC of $5.4 billion and $1.5 billion, respectively. source

Impact estimates