This article first appeared on GuruFocus.
Consolidated Revenue: $109.9 billion, up 22% year-over-year.
Operating Income: $39.7 billion, with an operating margin of 36.1%.
Net Income: $62.6 billion, an increase of 81% year-over-year.
Earnings Per Share (EPS): $5.11, up 82% year-over-year.
Operating Cash Flow: $45.8 billion for the quarter.
Free Cash Flow: $10.1 billion for the quarter.
Google Services Revenue: $89.6 billion, up 16% year-over-year.
Google Cloud Revenue: $20 billion, up 63% year-over-year.
YouTube Advertising Revenue: $9.9 billion, up 11% year-over-year.
Subscription Platforms and Devices Revenue: $12.4 billion, up 19% year-over-year.
Google Cloud Operating Income: $6.6 billion, with an operating margin of 32.9%.
Other Bets Revenue: $411 million, with an operating loss of $2.1 billion.
Capital Expenditures (CapEx): $35.7 billion for the quarter.
Cash and Marketable Securities: $126.8 billion at the end of the quarter.
Long-term Debt: $77.5 billion at the end of the quarter.
Release Date: April 29, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Alphabet Inc (NASDAQ:GOOG) reported a 22% increase in consolidated revenue, reaching $109.9 billion, marking the 11th consecutive quarter of double-digit revenue growth.
Google Cloud revenue grew by 63%, driven by strong demand for AI solutions and infrastructure, with the backlog nearly doubling to $462 billion.
The company saw a significant increase in paid subscriptions, reaching 350 million, with YouTube and Google One as key drivers.
AI investments are driving performance across the business, with AI models processing over 16 billion tokens per minute, up from 10 billion last quarter.
YouTube continues to show momentum, with US viewers watching over 200 million hours of content daily and a significant increase in YouTube Music and Premium subscribers.
Negative Points
Network advertising revenues declined by 4% year-on-year, indicating challenges in certain advertising segments.
Total operating expenses increased by 24% to $28.9 billion, driven by higher compensation and marketing investments.
The Other Bets segment reported an operating loss of $2.1 billion, highlighting ongoing challenges in non-core business areas.
The company is facing compute constraints, which have limited its ability to meet demand, particularly in Google Cloud.
There is a low single-digit percentage point headwind to Google Cloud’s operating margin for the remainder of 2026 due to the acquisition of Wiz.
Q & A Highlights
Q: Sundar, on a recent podcast, you talked about constraining compute to ensure proper capacity deployment. What areas in Search are you most excited about applying next-generation compute to generate returns in the next 12 months? A: Sundar Pichai, CEO: We are leveraging our investments in Gemini models, applying them in Search and the Gemini app, which is driving innovations in AI overviews and AI mode. Looking ahead, there’s a massive opportunity to deepen user engagement through agentic workflows. Our full stack AI approach positions us well to bring these experiences to Search.
Q: Anat, you mentioned a significant increase in 2027 CapEx. How do you plan to service the massive backlog and what will drive this CapEx increase? A: Anat Ashkenazi, CFO: We’ve been increasing CapEx thoughtfully to meet demand from both external customers and internal needs. The robust demand across our business, particularly in Cloud, necessitates this increase. We’ll provide more clarity in future earnings calls, but it’s a meaningful opportunity we aim to capitalize on responsibly.
Q: Sundar, how does your unique AI infrastructure position you competitively in building capacity and scaling compute? A: Sundar Pichai, CEO: Our vertically optimized AI stack, co-developed components, and ownership of frontier models and silicon differentiate us. This comprehensive approach, combined with deep security investments, allows us to meet customer needs better than others. We’re investing based on tangible demand signals and a robust ROIC framework.
Q: Philipp, can you elaborate on the impact of the Universal Commerce Protocol (UCP) on your services business as agentic commerce scales? A: Philipp Schindler, Chief Business Officer: UCP is an open standard for agentic commerce, transforming shopping from discovery to post-purchase support. Co-developed with industry leaders, it powers new checkout experiences in AI mode and the Gemini app, allowing seamless transactions. We’re excited about its potential to enhance consumer journeys.
Q: Anat, can you break down the drivers of margin expansion, particularly in Cloud, given the perception that AI revenues are lower margin? A: Anat Ashkenazi, CFO: Strong revenue growth in Cloud and Google Services provides leverage down to the bottom line. We’ve focused on running a productive organization, optimizing technical infrastructure, and leveraging AI across our business. Cloud’s margin expansion is driven by top-line growth and efficient operations.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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