Alphabet Inc. announced a robust first-quarter earnings report, significantly outpacing analyst targets. The tech giant posted earnings per share of $5.11, nearly double the expected $2.63, and revenue climbed 22% year-over-year to $109.9 billion, surpassing the $107.2 billion Wall Street projection.
Central to this strong performance was Google Cloud, which saw its revenue surge by 63% to $20.2 billion, driven by enterprise AI solutions like Gemini Enterprise. CEO Sundar Pichai highlighted that AI offerings are now the primary growth driver for the cloud division. The company also noted a growing backlog of $460 billion for cloud services.
Alphabet is revising its 2026 capital expenditure guidance upward to a range of $180 billion to $190 billion, acknowledging substantial investments in AI infrastructure, data centers, and servers. This increased spending is a strategic move to meet the escalating demand for AI computing power, with Pichai stating, "We are compute constrained in the near term."
Analysts noted Alphabet's ability to fund this expansion through durable revenue growth, positioning it favorably against competitors. The company's integrated approach, linking infrastructure investments to product usage and enterprise demand, has reassured investors. Alphabet's stock saw a significant jump in after-hours trading following the announcement.
Beyond cloud, Google Search revenue grew 19%, contributing to a 15% rise in advertising revenue to $77.25 billion. While YouTube ad revenue slightly missed estimates, subscription growth is reportedly outpacing ad growth.
Alphabet's Other Bets segment reported $411 million in sales. Waymo, the self-driving car unit, is expanding its service areas and recently raised $16 billion in funding.