The undisputed global leader of Internet search engine and artificial intelligence-powered cloud giant Alphabet Inc. GOOGL came up with quarterly adjusted earnings of $5.11 per share, beating the Zacks Consensus Estimate by 93.6%. First-quarter 2026 profits soared 82% year over year. The company posted quarterly consolidated revenues of $109.9 billion, up 21.8% year over year.
Alphabet is significantly emphasizing its AI capabilities to boost its search engine advertising business and cloud computing business. Alphabet raised its 2026 capital expenditure target to the range of $180-190 billion. Management said that 2027 capex will further increase significantly.
AI-Powered Cloud Computing Business
Google Cloud has solidified its position as a major provider in the highly competitive cloud infrastructure market against Amazon.com Inc.’s AMZN cloud arm, Amazon Web Services, and Microsoft Corp.’s MSFT Azure.
Alphabet’s Google Cloud revenues rose 63% year over year to $20 billion in the last quarter, outpacing the rest of the business. GOOGL’s Cloud operating income tripled to $6.6 billion, with margins near 33%. Management attributed the acceleration to strong performance across Google Cloud Platform, enterprise AI solutions, enterprise AI infrastructure and core services such as cybersecurity and data analytics.
The quarter also featured a sharp step-up in contracted demand, with Cloud backlog reaching roughly $462 billion at quarter-end. GOOGL is cashing in on the increasing demand for Large Language Models with its most powerful AI model called Gemini.
GOOGL reported that Gemini Enterprise is seeing massive momentum, with 40% growth quarter over quarter for paid monthly active users. The Gamini platform offers AI-powered solutions like enterprise agents, workplace automation tools, developer assistants, and cloud services.
Advantages of GOOGL Cloud
Alphabet continues to benefit from investments in infrastructure, security, data management and analytics, along with its partnership with NVIDIA Corp. NVDA and a growing global footprint of cloud regions and availability zones.
The company also plans to begin delivering tensor processing units (TPUs) to select customers in their own data centers, with most related revenues expected in 2027, which expands the addressable market over time.
Google Cloud’s differentiated full-stack AI approach strengthens Alphabet’s competitive positioning. The company integrates its own infrastructure (TPUs and GPUs), proprietary AI models (Gemini), and data platforms (like BigQuery) into a unified offering.
