Alphabet Q1 tops estimates, Google Cloud revenue soars
Alphabet beat Wall Street forecasts for quarterly revenue on Wednesday; enterprise AI spending delivered the best quarter of growth for the cloud unit since the start of the AI boom.
Total revenue for Google’s parent company rose 22 percent to $109.9 billion in the first quarter, according to LSEG data; this was above the $107.2 billion estimate.
The company’s shares rose more than seven percent in extended trading.
According to data compiled by LSEG, Google Cloud’s revenue rose 63 percent to $20 billion in the first quarter ending in March; This was well above analysts’ average forecast for a 50.1 percent increase.
According to LSEG data, this growth rate is the best since the company started increasing segment revenues in 2020. The cloud unit’s operating income tripled to $6.6 billion in the first quarter, from $2.2 billion a year earlier.
Alphabet’s overall consolidated operating income increased 30 percent to $39.7 billion.
Google has begun selling TPU chips that compete with Nvidia’s GPUs directly to some customers, CEO Sundar Pichai announced on a conference call with analysts.
For years, Google has reserved its TPUs, which stand for “tensor processing units,” for internal use only, to develop technologies such as the Gemini AI model. The decision to lease TPUs to cloud customers has helped Google Cloud grow, but the company has so far held off on selling these chips directly.
“For the first time, our enterprise AI solutions have become our primary growth driver for the Cloud,” Pichai said on the call.
Pichai also said the Gemini chatbot powered the “strongest quarter ever” for consumer AI.
He said the company is enjoying growth across the board thanks to its full-stack AI approach that addresses every layer of the AI technology chain, including chips, data centers, AI models and developer tools.
In response, CFO Anat Ashkenazi said Alphabet raised its capital spending forecast for 2026 to between $180 billion and $190 billion, an increase of $5 billion from last quarter.
Capital expenditures in the first quarter more than doubled from the previous year, reaching US$35.67 billion.
“Perhaps more important than Alphabet’s massive cloud growth rate is a broader justification that the $180 billion capital spending plan that surprised the market last quarter is within the company’s spending power given the durability and quality of the revenue curve shown today,” said Thomas Monteiro, a senior analyst at Investing.com.
Alphabet, the world’s third-largest cloud services provider behind Amazon Web Services and Microsoft Azure, has continued to make major deals, including expanded AI infrastructure partnerships with Meta and cybersecurity firm Palo Alto Networks.
The results underscore Alphabet’s position as a major beneficiary of global AI spending even as investors worry whether big spending on infrastructure will translate into sustainable growth and market share gains.
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