Alphabet reported first-quarter revenue of $109.9 billion, exceeding Wall Street estimates of $107.2 billion, according to LSEG data. The growth was driven by a surge in enterprise spending on artificial intelligence, which delivered the best quarter for its cloud unit since the AI boom began.
Key Takeaways
Alphabet reported first-quarter revenue of $109.9 billion, surpassing Wall Street estimates driven by AI-driven cloud growth. Shares rose over 7% as Google Cloud revenue hit $20 billion, a record since 2020. The company also increased its capital expenditure guidance for 2026 to up to $190 billion.
The company's shares rose more than 7% in extended trading. Google Cloud revenue grew 63% to $20 billion, well above analysts' average estimate of a 50.1% increase, according to data compiled by LSEG. This growth rate is the best since Alphabet began breaking out the segment's revenue in 2020.
Operating income for the cloud unit tripled to $6.6 billion from $2.2 billion a year earlier, while Alphabet's overall consolidated operating income increased 30% to $39.7 billion. CEO Sundar Pichai announced that Google began selling its TPU chips directly to some customers, which compete with Nvidia's GPUs.
The company also updated its capital expenditure guidance for 2026, increasing it from a previous estimate of $175 billion to $185 billion. Alphabet now expects spending between $180 billion and $190 billion. Capital spending in the first quarter more than doubled from a year earlier to $35.67 billion.
Despite similar upbeat results, Wall Street had very different reactions compared to Meta. While Alphabet's shares popped 7% in extended trading, Meta's stock fell 7%. This disparity is attributed to Alphabet's robust cloud infrastructure business, which allows it to turn AI investments into revenue more effectively than Meta.
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