The results highlighted how deeply AI is reshaping the company’s revenue mix, with its cloud division posting its fastest growth since the early days of the AI boom.
Revenue at Alphabet rose 22% year-on-year to $109.9 billion in the first quarter, surpassing analyst expectations of $107.2 billion, according to LSEG data. The company also reported a sharp jump in profitability across its cloud segment, where operating income tripled to $6.6 billion from $2.2 billion a year earlier.
But the standout figure came from Google Cloud, which saw revenue surge 63% to $20 billion in the quarter ended March—well ahead of estimates for a 50.1% increase. It marks the strongest growth rate since the unit began reporting separately in 2020.
In an earnings statement, the company said the performance was driven by “increased spending on enterprise AI products and infrastructure,” while CEO Sundar Pichai said the company’s AI push is gaining momentum across both consumer and enterprise markets.
“2026 is off to a terrific start. Our AI investments and full stack approach are lighting up every part of the business,” Pichai said, pointing to the company’s integrated strategy spanning chips, data centers, models, and developer tools.
He also highlighted strong traction for the company’s AI ecosystem, noting that its Gemini chatbot delivered the “strongest quarter ever” for consumer AI adoption.
Behind the headline growth, Alphabet’s cloud backlog nearly doubled quarter-on-quarter to more than $460 billion, signaling sustained enterprise demand even as capacity constraints continue to limit supply across the industry.
The company reported capital expenditures of $35.67 billion for the quarter, more than double the level a year earlier, though slightly below analyst estimates. It previously projected full-year spending between $175 billion and $185 billion as it races to expand AI infrastructure.
Alphabet is not alone in escalating investment. Alongside peers such as Amazon and Meta Platforms, the company is expected to contribute to more than $600 billion in combined AI-related capital spending across major tech firms this year.
The cloud segment’s performance also helped ease investor concerns about competitive pressure in the broader market, where Alphabet ranks behind Amazon Web Services and Microsoft’s Azure.
Still, the industry faces a shared constraint: demand for AI computing power continues to outpace supply, forcing hyperscalers to accelerate investments in data centers, advanced chips, and networking infrastructure.
Alphabet has also strengthened its AI positioning through partnerships, including expanded infrastructure collaborations with Meta and cybersecurity firm Palo Alto Networks. It is also expected to gain additional reach through a partnership supporting Apple’s AI features, including upgrades to Siri.
The company said AI-driven tools such as AI Overviews and AI Mode are already boosting engagement in its core search business, with early monetization efforts described as broadly aligned with traditional advertising models.
As investors weigh heavy spending against long-term returns, Alphabet’s latest results suggest its AI strategy is not only holding market share—but accelerating growth across its most important businesses.