Alphabet Q1 Earnings Beat Expectations Driven by Cloud Growth

Alphabet reported first-quarter earnings after the bell Wednesday, showing revenue that topped expectations boosted by its surging cloud business. Shares climbed following the report.

Earnings per share: $5.11 Revenue: $109.9 billion vs $107.2 billion expected by analysts polled by LSEG

It is unclear if EPS was comparable to the $2.63 expected by analysts polled by LSEG.

Wall Street was also watching several other numbers in the report: Google Cloud: $20.02 billion vs. $18.05 billion estimated, according to StreetAccount YouTube advertising: $9.88 vs. $9.99 billion estimated, according to StreetAccount Traffic acquisition costs: $15.22 vs. $15.3 billion estimated, according to StreetAccount

The company beat Wall Street's expectations for revenue, growing 20% increase from last year, marking the company's highest rate of growth for any quarter since 2022.

"Our enterprise AI solutions have become our primary growth driver for cloud for the first time in Q1," CEO Sundar Pichai told analysts on the earnings call.

The company also said it is updating its 2026 capital expenditure guidance range to $180 billion to $190 billion, up from it previous estimate of $175 billion to $185 billion.

Alphabet said in December it will acquire Intersect, a data center company, for $4.75 billion in cash and the assumption of debt. CFO Anat Ashkenazi also said it expects the company's 2027 CapEx to "significantly increase" compared to 2026.

Pichai said Gemini Enterprise paid monthly active users grew 40% from the previous quarter.

Net income came in at $62.57 billion, up 81% compared to the year prior.

Alphabet stock has outperformed its Magnificent Seven peers this month, up 21%, and tech stocks are poised to wrap up their best month since April 2020, with the Nasdaq up 14% for the month as of Wednesday's close.

Wall Street has been piling into the sector despite concerns that surging oil prices and supply chain disruptions from the war in Iran will lead to rising costs for AI infrastructure.

The four hyperscalers — Alphabet, Amazon, Meta and Microsoft — all reported results on Wednesday, updating investors for the first time since the U.S. began combat operations in Iran in late February.

Google Cloud beat Wall Street's expectations, recording a 63% increase in revenue from a year ago. Google's Cloud unit houses most of the company's AI services and products. The company said the growth was led by an increase in Google Cloud Platform (GCP) across enterprise AI Solutions and enterprise AI Infrastructure.

The company says Google Cloud has a backlog of $460 billion.

Alphabet reported $35.7 billion in capital expenditures during the quarter. That includes real estate, servers, data centers and other infrastructure.

Alphabet is pouring money into AI infrastructure to capitalize on exploding demand. The Google parent said in January it expects 2026 capital expenditures to be in the range of $175 billion to $185 billion.

Google's advertising revenue came in at $77.25 billion, up 15.5% from the same time last year.

YouTube advertising missed Wall Street's expectations, reporting $9.88 billion for the quarter. YouTube subscriptions are now growing faster than YouTube ads, said chief business officer Philipp Schindler.

Other Bets, which includes Alphabet's self-driving car company Waymo, brought in $411 million — down from the $450 million, the same time last year. During the quarter, Waymo surpassed 500,000 fully autonomous rides a week, the company said Wednesday.