Results Beat Wall Street Expectations
Alphabet shares rose more than 3% after the Google parent reported first quarter results that beat analyst expectations on both revenue and earnings. The performance was supported by strong growth in Google Cloud and continued momentum around the company’s artificial intelligence products.
Alphabet reported earnings per share of 5.11 dollars on revenue of 109.9 billion dollars. Wall Street had expected earnings of 2.62 dollars per share on revenue of 107.1 billion dollars, according to Bloomberg consensus estimates. In the same period last year, the company posted earnings per share of 2.81 dollars and revenue of 90.23 billion dollars.
Cloud Growth Drives The Market Reaction
Google Cloud revenue reached 20.03 billion dollars, ahead of expectations for 18.4 billion dollars. The result strengthened the investment case around Alphabet’s cloud platform, which has become one of the company’s most important growth engines.
The company also said Google Cloud backlog nearly doubled during the quarter to more than 460 billion dollars. For investors, that figure signals strong contracted demand and improves visibility into future revenue, particularly as enterprise customers increase spending on AI infrastructure and cloud services.
Gemini Adds Momentum To The AI Story
Alphabet said Gemini Enterprise grew paid monthly active users by 40% quarter over quarter. The company also reported that its first party models are processing more than 16 billion tokens per minute, a 60% increase from the prior quarter.
These metrics matter because investors are looking for evidence that Alphabet can translate its AI investments into commercial adoption. Gemini has become a central part of the company’s strategy to compete across enterprise software, search, cloud services and AI tools.
Advertising Remains A Core Profit Engine
Google Advertising revenue topped 77.2 billion dollars, beating analyst expectations of 76.2 billion dollars. YouTube advertising revenue reached 9.88 billion dollars, reinforcing the platform’s role as a major contributor to Alphabet’s advertising business.
While cloud and AI are driving much of the market excitement, advertising remains the company’s largest and most profitable business. The strength of this segment gives Alphabet financial flexibility as it continues to invest heavily in data centers, chips and artificial intelligence infrastructure.
Capital Spending Rises Again
Alphabet raised its capital expenditure outlook to a range of 180 billion to 190 billion dollars, up from its previous forecast of 175 billion to 185 billion dollars. The increase reflects the scale of infrastructure required to support cloud expansion and AI workloads.
Heavy spending remains a key issue for investors across large technology companies. The market is rewarding AI growth, but it is also watching closely to see whether higher investment can produce durable revenue, margin expansion and long term competitive advantages.
Custom Chips Open A New Front
Alphabet said it plans to begin selling its custom TPU chips to select third party customers for use in their own data centers. The move could turn Google’s chip technology into a broader commercial opportunity and deepen its role in the AI infrastructure market.
The company also recently announced two new AI chips, the TPU 8t and TPU 8i, and entered an agreement with Anthropic and Broadcom to provide multiple gigawatts of TPU capacity. These moves place Google in closer competition with Nvidia and AMD, even as those companies remain important partners. Morgan Stanley analyst Brian Nowak said the chip business may not yet be priced into the stock and could become a significant driver in 2027.
