TLDR

  • Alphabet delivered Q1 EPS of $5.11, far exceeding the $2.63 analyst projection
  • Total revenue reached $110B, climbing 22% compared to last year and surpassing the $107B projection
  • Google Cloud posted 63% revenue growth to $20B while achieving a 33% operating margin
  • Cloud commitments expanded to $462B, almost doubling; capital expenditures reached $36B during the quarter
  • Shares climbed over 7% after market close, prompting KeyBanc to increase its price target to $425

Alphabet delivered first-quarter financial results on Wednesday that exceeded Wall Street projections on every metric, triggering a share price increase of more than 7% during extended trading hours.


GOOGL Stock Card
Alphabet Inc., GOOGL

Earnings per share landed at $5.11, roughly double the consensus analyst forecast of $2.63, representing a significant jump from the $2.81 posted during the same period last year. Total revenue climbed to $109.9 billion, surpassing the $107 billion estimate while marking a 22% increase from Q1 2025.

During Thursday’s premarket session, GOOGL traded at $372.30, reflecting a 6.4% gain.

Investors focused primarily on Google Cloud performance. The cloud division generated $20 billion in quarterly revenue, representing a 63% year-over-year increase, while maintaining an operating profit margin of 33%. This margin expansion occurred despite rising depreciation expenses.

Google Cloud’s committed backlog expanded to $462 billion by the end of Q1, nearly doubling from the previous quarter. This metric provides strong visibility into contracted future revenue streams.

AI Spending Accelerates

Alphabet increased its 2026 capital expenditure projection during the earnings call, raising the forecast from $185 billion to $190 billion. Capital spending during Q1 alone approached $36 billion, representing a doubling from the same quarter one year earlier.

CEO Sundar Pichai noted during the call that cloud revenue would have climbed higher if supply could match demand levels. CFO Anat Ashkenazi highlighted “unprecedented internal and external demand for AI compute resources.”

Free cash flow dropped to $10 billion during the quarter. The company paused share repurchases, contrasting with the $15 billion buyback program executed during Q1 2025.

Alphabet raised approximately $30 billion through debt issuance, bringing long-term debt obligations to $77.5 billion, with an additional $13 billion in lease commitments.

Ad Business Stays Strong

Advertising continues to represent 70% of Alphabet’s overall revenue mix. Ad sales increased 16% year-over-year, with Search powering the gains through 19% growth. This performance marked the fourth consecutive quarter of double-digit advertising revenue expansion.

The third-party ad network segment contracted by 4% during the period.

Alphabet’s net profit reached $62.6 billion for the quarter, representing an 81% increase compared to the corresponding period last year. The company’s market capitalization currently stands around $4.2 trillion, up from $1.9 trillion one year ago.

KeyBanc analyst Justin Patterson elevated his GOOGL price target to $425 from $380, maintaining an Overweight rating. He expressed confidence in the returns generated from Alphabet’s current investment cycle given the accompanying growth trajectory.

Alphabet’s performance contrasted sharply with other Big Tech players. Meta declined approximately 7% in after-hours trading after presenting an investment roadmap that concerned investors. Microsoft experienced brief weakness despite similarly exceeding forecasts.

Google Cloud agreements with enterprise clients and government entities, including US military contracts, drove substantial contributions to the cloud division’s robust performance.