Alphabet Reports Strong Q1 2026 Earnings with Increased AI Investments

Alphabet, the parent company of Google, reported first-quarter 2026 revenue of $109.9 billion, marking a 22% increase from the previous year. This figure surpassed the $107.2 billion expected by analysts, according to LSEG data. Earnings per share reached $5.11, an 82% rise that exceeded the consensus estimate of $2.63.

Shares of Alphabet climbed more than 6.5% in after-hours trading after the earnings release. As of the close on the prior trading day, the stock was up nearly 12% year to date, nearing a record high of around $350.

The company saw beats in search, subscriptions, and cloud segments, offsetting smaller misses in YouTube advertising, Networks, and Other Bets. Cloud revenue increased 48% year-over-year, leading to over 200% growth in cloud operating income. Costs were kept under control, resulting in year-over-year margin expansion.

AI investments showed signs of paying off, with AI experiences contributing to all-time highs in search usage and queries. Google Cloud growth accelerated to 63% year-over-year, up from 48% in the fourth quarter of 2025.

Alphabet now expects full-year 2026 capital expenditures between $180 billion and $190 billion, a $5 billion increase at the midpoint from prior estimates. This includes investments related to the acquisition of data center and energy infrastructure solutions provider Intersect, finalized in March 2026.

CFO Anat Ashkenazi stated on the post-earnings conference call that the company is seeing unprecedented demand for AI compute resources. She noted that investments in AI are delivering strong growth in Google Cloud and Google services, and expects 2027 capital expenditures to significantly increase compared to 2026.

The latest Gemini artificial intelligence model, along with custom chips co-designed with Broadcom, has drawn attention. Google has also been selected as Apple's partner for AI.

Amazon, Microsoft, and Meta

Platforms also reported earnings on the same day. Alphabet's results highlight its position in search dominance and accelerating cloud growth.