Alphabet's AI investment surge delivers as Google Cloud revenue jumps 63% amid $700B spending race

Alphabet Sales Beat Estimates on Google Cloud, AI Customers

Alphabet Inc. reported quarterly revenue and profit that beat projections, fueled by strong growth in its cloud computing unit, signaling that the internet giant's unprecedented investments in AI infrastructure are beginning to pay off. Google's parent company said first-quarter revenue, excluding partner payouts, was $94.7 billion, compared with the $91.6 billion expected on average by analysts, according to data compiled by Bloomberg. Google has been spending billions on a plan to build enough data centers with powerful servers for itself and its cloud clients as fast as possible. Investors are looking at the cloud business for signs about whether demand will continue to grow -- which is considered a strong indicator for the pace of the AI boom. Google is locked in a tight race with startups Anthropic PBC and OpenAI to develop AI that can perform on par with humans and sell it to businesses and consumers. Google's cloud computing unit reported sales of $20 billion, compared with the $18.4 billion analysts' projection. Microsoft Corp. and OpenAI have agreed to drop the software giant's exclusive right to sell the startup's AI models, opening the door for the ChatGPT maker to pursue deals with cloud-computing rivals like Amazon.com Inc. In exchange for ending that exclusivity -- which helped boost Microsoft's cloud sales in the early years of the AI boom -- the world's largest software maker will no longer pay a revenue share on OpenAI products it resells on its cloud. The two companies announced the revised deal in a joint statement on Monday. Bloomberg Intelligence OpenAI Breaks From Exclusive AI Pact With Microsoft Arrow Right 22:33 The new pact is meant to simplify a complicated relationship that has been foundational to OpenAI's rise and the broader artificial intelligence boom. OpenAI has since pursued deals with multiple cloud providers, including Amazon, to meet its growing computing needs to build and serve AI software to a wider audience. "The greater predictability in the amended agreement strengthens our joint ability to build and operate AI platforms at scale while providing both companies the flexibility to pursue new opportunities," OpenAI and Microsoft said in their statement. Monday's agreement clears the way to OpenAI's models appearing on Amazon Web Services and other cloud-computing providers. As part of an investment announced earlier this year, the Amazon unit said it was jointly developing products with OpenAI that would be hosted on AWS. Microsoft weighed legal action, on the view that the effort would almost certainly breach its exclusive rights to OpenAI's intellectual property, the Financial Times reported last month. Microsoft remains OpenAI's "primary cloud provider," and new products from the startup will be made available first on Azure, Microsoft's cloud unit. Revenue share paid by OpenAI on sales of its products that it makes itself will be capped, the companies said. But until they reach that cap -- which wasn't disclosed -- the revised deal brings more certainty that OpenAI will continue to send those checks. Take our Markets Pulse surveyAre companies' expenditures on AI justified by the returns they're getting? Let us know. Microsoft will receive a revenue share from OpenAI through 2030, regardless of progress the startup makes toward its goal of building artificial general intelligence -- a system capable of matching human capability across tasks. Under the prior agreement, revenue share payments were due to stop should OpenAI reach that milestone. As part of OpenAI's restructuring last year as a for-profit business, Microsoft received a 27% ownership stake in the AI startup. The software giant was a key holdout in OpenAI's corporate overhaul as the two negotiated the complex terms of their partnership. Microsoft's relationship with OpenAI is set to be in the spotlight this week as the companies square off against Elon Musk in court. The billionaire has accused OpenAI of abandoning its founding principles by converting to a for-profit company with billions of dollars in support from Microsoft. He's seeking as much as $134 billion in damages from OpenAI and Microsoft. Microsoft shares were down about 1% as the markets opened in New York on Monday. Amazon fell less than 1%. "We do not believe this revised agreement should come as a major surprise to investors at this point," analysts with Evercore ISI wrote in a note to clients on Monday. "Microsoft has increasingly signaled interest in a broader multi-model strategy, while OpenAI has clear incentives to expand distribution more broadly across the market."

Google Cloud pulls ahead as Big Tech's AI bet swells to $700 billion

April 30 (Reuters) - Alphabet's (GOOGL.O), opens new tab blowout cloud growth has reset expectations across major tech companies, leaving investors to recalibrate which firms are delivering the clearest returns. All four of the U.S. tech giants that reported results on Wednesday signaled that spending on artificial intelligence would not slow down, with combined outlays now set to surpass $700 billion this year, up from around $600 billion previously. Alphabet shares jumped more than 6% in premarket trading on Thursday, while Meta stock (META.O), opens new tab fell nearly 9%. Amazon (AMZN.O), opens new tab shares rose 2.6%, while those of Microsoft (MSFT.O), opens new tab dipped 1.8%. The reactions underscore a growing divide as the biggest tech companies pour record sums into AI infrastructure, with investors increasingly rewarding those that are translating spending into clear revenue growth. Amazon and Microsoft both reported faster growth in their cloud-computing revenue in the March quarter at 28% and 40%, respectively. But those paled in comparison to Google Cloud's 63% revenue surge, its best growth yet, which was far above estimates of 50.1%. CEO Sundar Pichai said Google's AI tools for large businesses had become Google Cloud's primary growth driver for the first time, vindicating Alphabet's decision to turn its ⁠vast research capabilities into commercial gains. To be sure, Google's cloud business is much smaller than those of Amazon and Microsoft and has only in the past several quarters started to contribute meaningfully to Alphabet's overall revenue. Meta also beat quarterly revenue expectations but warned of potential losses from a global backlash surrounding children's safety on social media, adding to pressure from its ballooning AI spending. "Google's really the shining star so far in tech earnings," said Ken Mahoney, CEO of Mahoney Asset Management. GOOGLE GRABS NEW CLOUD BUSINESS Analysts and investors believe Google is scooping up a large chunk of new computing demand thanks to its AI tools for businesses and powerful custom chips that have attracted customers like Anthropic. Pichai said Google had started selling its AI chips, which compete with Nvidia's (NVDA.O), opens new tab semiconductors, directly to some customers. "It is capturing new workloads for the most part - sometimes from companies new to cloud, often additional workloads from customers of other clouds who want to be less dependent on a single cloud provider or who like Google data, analytics and AI offerings," said Lee Sustar, principal analyst at Forrester. Pichai said cloud growth could have been higher were it not for the industry-wide capacity constraints on computing power that have sparked Big Tech's spending spree. To overcome those shortages, the company ⁠bumped its annual capital spending forecast by $5 billion to between $180 billion and $190 billion and said it was planning another significant increase in 2027. "The risk of sitting it out is bigger than the risk of leaning in," said Daniel Newman, CEO of tech research firm Futurum Group, referring to the large AI bills. "Every hyperscaler (large cloud company) understands that under-investing in this cycle is an extinction-level risk." Alphabet's rising expenses will bring it closer to Amazon, which stuck with its $200 billion annual spending projection. That somewhat reassured investors who had dumped its stock in January when the forecast was first released. Back-to-back deals deepening Amazon's tie-ups with OpenAI and Anthropic have also lifted shareholder confidence. The company's shares are up roughly 14% this ⁠year, as of last close, among the best performers in the "Magnificent Seven" group of tech mega-caps. MICROSOFT CLOUD, OUTLAY FORECASTS EXCEED ESTIMATES After a modest growth pickup in Microsoft's Azure cloud business initially sent shares lower, the company reassured investors with a prediction that revenue there would increase between 39% and 40%, in constant currency terms in its current quarter, better than expectations for 36.7% growth. But the expected revenue acceleration would also come with a surge in spending: its capital outlay for ⁠calendar 2026 is expected to total $190 billion. About $25 billion of that spending is coming from rising costs of components such as chips. "Broad and growing customer demand continues to exceed supply," CFO Amy Hood said of Azure's AI business on a post-earnings call. Microsoft touted user gains for its Copilot AI assistant and said engagement levels for those using the tool equaled that of Outlook. Overall adoption of the Copilot, however, has ⁠remained sluggish. "Customers are going to Google because its AI is seen as more accurate and trustworthy than Copilot and because its full-stack approach is likely to drive greater economies of scale," said Rebecca Wettemann, CEO of Valoir, an industry analyst firm, referring to Google's focus on every layer of the AI technology chain including chips, data centers, AI models and developer tools. Reporting by Aditya Soni and Deborah Sophia in Bengaluru; Editing by Sayantani Ghosh and Thomas Derpinghaus Our Standards: The Thomson Reuters Trust Principles., opens new tab

AI boom: Big Tech capital expenditures now seen topping $1 trillion in 2027

First-quarter cloud revenue for Alphabet surged 63% on the year, prompting about a 10% jump in its stock. CFO Anat Ashkenazi said Wednesday that capex plans are increasing to meet "robust demand." The overall cost of the AI buildout has been causing heads to spin, but analysts say they're seeing flowthrough from investments to revenue as valuations and market caps surge. "Cap-ex keeps climbing, but [return on investment] ROI is evident via ~$2 trillion backlog and accelerating cloud growth," Jefferies analysts said. "Margin leverage holds for the hyperscalers despite AI investments, highlighting structural [operating expense, or] opex discipline." Confidence on monetization is particularly high for Alphabet where backlog growth is undergirding computing inventories and expansions. The "backlog supports [the] cap-ex super-cycle," Brian Pitz wrote for BMO Capital Markets on Thursday. "Google's backlog nearly doubled quarter-over-quarter with a 400% annual increase to $462B." "The majority of the backlog is for core Google Cloud Platform contracts ... and Google expects to recognize just over 50% of it as revenue over the next 24 months," he added. While Google's cloud revenue impressed analysts, Meta's expansion plans troubled investors, who wanted to see more pay off for the investments it has been making. Shares were recently down about 8%. "Meta likely remains in the penalty box pending clearer capex ROI," analysts with Jefferies wrote in a Thursday note. The scompany spent $72 billion on capex in 2025, and is expecting to double that in 2026 to between $125 billion and $145 billion. That's up from a prior range of $115 billion to $135 billion. "We are increasing our infrastructure capex forecast for this year," Meta CEO Mark Zuckerberg said Wednesday. "Most of that is due to higher component costs, particularly memory pricing. But every sign that we're seeing in our own work and across the industry gives us confidence in this investment." Meta's free cash flow has been dwindling, dropping to just $1.2 billion in the first quarter from $26 billion in the same period last year. Bank of America analysts said they expect to see sales and free cash flow improving in 2026 throughout the sector, helping to support the spending.

Alphabet rides AI surge as revenue and profit crush expectations

Serving tech enthusiasts for over 25 years. TechSpot means tech analysis and advice you can trust. Bottom line: Alphabet's latest results show how central artificial intelligence has become to its growth - and how aggressively the company is increasing spending to support the technology. The Google parent reported $94.7 billion in first-quarter revenue, excluding partner payouts, beating analysts' expectations of $91.6 billion. Earnings came in at $5.11 per share, well above the $2.62 estimate. Investors responded quickly, pushing the stock up more than 6% in after-hours trading. Much of Alphabet's momentum is tied to AI, particularly inside Google Cloud. The division brought in $20 billion in revenue, ahead of the $18.4 billion analysts had projected, and showed what the company called a "meaningful acceleration in growth." Just as notable, its backlog - future revenue under contract - nearly doubled from the previous quarter to more than $460 billion, reflecting growing demand for AI infrastructure and services. That demand is strong enough that Google can't fully keep up. "We are compute constrained in the near term, and as an example, our cloud revenue would have been higher if we were able to meet the demand," CEO Sundar Pichai said. "We are working through that moment and investing." The scale of that investment is significant. Alphabet now expects to spend up to $190 billion on capital expenditures this year, slightly above its prior estimate and roughly double its 2025 spending. Chief Financial Officer Anat Ashkenazi said spending will climb further in 2027. "These strong results reinforce our conviction to invest the capital required to continue to capture the AI opportunity," she said. A significant portion of that spending is going toward hardware. Google's tensor processing units, or TPUs, have long powered its internal AI workloads, but the company is now preparing to offer them directly to select customers for use in their own data centers. The move puts TPUs in more direct competition with Nvidia's chips as companies seek scarce high-performance compute. On the software side, adoption is rising alongside infrastructure. Google said use of its Gemini models continues to expand across both consumer and enterprise products. The Gemini chatbot reached 750 million users by the end of 2025, while paid monthly active users for Gemini Enterprise grew 40% from the previous quarter. At the same time, Google is continuing to rework its core search business around AI. The company now integrates AI-generated answers directly into many search results, and Pichai said query volume has reached an all-time high since those features were introduced. He also noted that Google has reduced the cost of serving AI-powered responses, addressing earlier concerns that generative AI could make search significantly more expensive to operate. The results help address investor concerns that chatbots from companies like OpenAI and Anthropic could erode Google's search dominance. "AI has enhanced search, not killed it," Andrew Rocco, a strategist at Zacks Investment Research, wrote. "Google has masterfully integrated AI into its search offering." Even so, the competitive landscape is becoming more complicated. Alphabet is both a backer of and a rival to some of the companies competing in the same AI markets. It has invested heavily in Anthropic, with plans to put up to $40 billion into the startup, while also competing against it in areas like AI coding tools. Anthropic's Claude Code, in particular, has emerged as a fast-growing product that has drawn attention inside Google. For now, Alphabet's results indicate that its strategy - spanning chips, cloud, and AI applications - is gaining traction. But the company's own comments about limited compute capacity point to a constraint that extends beyond Google. Across the industry, scaling AI is becoming as much an infrastructure challenge as a software one.

Q1 2026 Big Tech earnings: $650 billion in AI capex and compute constraints

Google Cloud grew 63%, AWS 28%. Meta raised its full-year capex guide to $125-$145 billion, sending its shares down 6% after hours. Combined 2026 AI spending across five hyperscalers is now on track to exceed $650 billion. The question hanging over Wednesday's earnings calls was whether the AI investment supercycle was producing commensurate returns, or whether the hyperscalers were building faster than demand could justify. The answers varied by company, but they were good enough to avoid a reckoning. Alphabet delivered $109.9 billion in revenue for Q1 2026, beating consensus by nearly $3 billion. The headline figure was Google Cloud, which grew 63% year on year to $20.02 billion, blowing past analyst estimates of $18.05 billion and accelerating sharply from the 48% growth it posted in Q4 2025. Net income came in at $62.57 billion, up 81% year on year, though that figure was significantly inflated by a $36.9 billion unrealised gain on equity securities. Capital expenditure reached $35.7 billion for the quarter, a 107% year-on-year increase, and the company raised its full-year capex guidance to $180-$190 billion, up from its prior $175-$185 billion range. CEO Sundar Pichai told analysts the company is 'compute constrained in the near term' and that cloud revenue would have been higher had capacity kept pace with demand. The cloud backlog stood at over $460 billion, nearly double the prior quarter. Amazon reported Q1 net sales of $181.5 billion, up 17% year on year and above the $177.2 billion consensus. AWS grew 28% to $37.59 billion, its fastest growth rate in more than three years and comfortably ahead of the 26% expected by analysts. Earnings per share of $2.78 crushed the $1.62 estimate. CEO Andy Jassy has committed approximately $200 billion in capital expenditure for 2026. Free cash flow for the trailing twelve months compressed to $1.2 billion, a 95% decline year on year, as AI infrastructure spending accelerated. Second quarter guidance of $194-$199 billion in net sales was well above the $189.2 billion consensus. Meta reported Q1 revenue of $56.31 billion, ahead of the $55.51 billion estimate, with Q2 guidance of $58-$61 billion bracketing the $59.56 billion consensus. The contentious number was capex: Meta raised its full-year 2026 guidance to $125-$145 billion from the prior $115-$135 billion range, citing higher component costs and expanded data centre capacity. Shares fell roughly 6% after hours. The increase underlines the extent to which Meta's AI strategy is a bet on its own infrastructure rather than on third-party cloud. Across three companies, the message is consistent: demand for AI compute is exceeding the infrastructure built to meet it. Pichai said it directly. Jassy's $200 billion capex commitment is its own version of the same statement. Meta's raised guidance acknowledges that even its aggressive spending is expanding. Google Cloud's 63% growth and AWS's 28% growth reflect genuine external demand for AI infrastructure from thousands of enterprise customers. Meta's AI spending is largely internal: building the compute it needs for its own recommendation systems, generative ad tools, and Llama models. The difference matters for how investors read the capex numbers. External cloud growth is a revenue signal. Internal infrastructure investment is a cost. The combined 2026 capex commitment across the five hyperscalers, Microsoft, Alphabet, Meta, Amazon, and Apple, is now on track to exceed $650 billion, according to industry estimates. That figure is larger than the GDP of most European countries. If it produces commensurate returns across the corporate sector will be the defining financial question of the next two years.

Google Gives OpenAI 20 Billion Reasons To Worry

On Wednesday, Google reported its highest revenue growth rate in a single quarter in roughly four years. The tech giant's revenue soared 20% in the first quarter of 2026 thanks in large part to the $20 billion in sales that the cloud computing unit in charge of its AI initiatives brought in. The news is particularly huge considering that only a day ago, the AI industry was rocked with a Wall Street Journal report claiming that OpenAI had missed its own revenue and user targets because ChatGPT growth had slowed toward the end of last year. The revenue growth miss was reportedly bad enough to have CFO Sarah Friar worried about whether the AI giant could pay for its computing contracts. The reason, according to the report, was that Google's Gemini had eaten into ChatGPT's market share. OpenAI is not a public company, so its financials are not made public and we can't truly compare numbers, but as the creator of ChatGPT, OpenAI has enjoyed a leading position in the industry since it began the AI hype cycle a couple of years ago. But that position has been questioned over the past few months, particularly following on the heels of Google's pretty well-received Gemini 3 release. Only a few weeks after Gemini 3 dazzled users, OpenAI declared a "code red" at the company. OpenAI has double the reason to be afraid of the Wednesday earnings report because it was Google's competitor offerings that really brought in the stellar revenue. "The largest contributor to Cloud's growth this quarter was AI solutions, driven by strong demand for industry-leading models, including Gemini 3," Google parent company Alphabet's CFO Anat Ashkenazi said in the company's earnings call. CEO Sundar Pichai also said Google's open models had been downloaded "over 500 million times." Google is shaping up to be a huge presence in the AI game, and a major competitor not just to AI tool providers like OpenAI and Anthropic, but also increasingly to infrastructure giant Nvidia. The company's TPU chips have been rising in popularity and finding big-name clients like Meta. In the call, Ashkenazi said that they were "seeing unprecedented internal and external demand for AI compute resources." Among its competitors, Google enjoys a rare positioning as a leading competitor in both tools and infrastructure, and it's the exact thing that executives are banking on for success. "The fact that we own frontier models [and] own the silicon really helps us stay ahead of the curve," Pichai said. That positioning also makes Google's cloud business a crucial indicator of the health of the AI boom. Investors have gambled unimaginable amounts of money on the fact that AI demand will play out as promised by the industry, and the recent OpenAI report has gotten people worried that might not be the case. Google's numbers might provide some solace, at least for now. As for what's next, company executives shared that the focus right now is on AI mode, Google's biggest bet in incorporating AI into the Search experience. Pichai also said that there is "a huge opportunity ahead" for agentic AI "in the context of Search." That premise of having an AI system browse the internet for you is something the company has been really banking on, to varying degrees of success. "Obviously, we are in very, very early innings of all that, but our investments in our full-stack AI approach, I think, put us in a good position to bring those experiences to Search," Pichai said. Company executives also said to expect news about Search at the upcoming Google I/O conference in mid-May, though they did not specify whether it would have something to do with AI. On the Gemini side of things, Google executives said their main focus is on the free offerings, and while there is no rush, ads are probably going to be introduced at one point to the chatbot. "Let's also be clear, ads have always been a big part of scaling products to reach billions of people, and if done well, ads can be really valuable and really helpful commercial information, and at the right moment, we'll share any plans," Google's chief business officer Philipp Schindler said in the call.

Alphabet's cloud unit beats quarterly revenue estimates on strong AI demand

April 29 (Reuters) - Alphabet (GOOGL.O), opens new tab topped Wall Street estimates for quarterly revenue growth at its cloud computing unit on Wednesday, driven by sustained enterprise spending on artificial-intelligence infrastructure. Shares of the company were up about 4% in extended trading. Alphabet's total revenue rose 22% to $109.9 billion in the first quarter, compared with an estimate of $107.2 billion, according to LSEG data. Revenue at Google Cloud grew 63% to $20 billion in the first quarter ended March, compared with analysts' average estimate of a 50.1% increase, according to data compiled by LSEG. The cloud unit's backlog nearly doubled quarter on quarter to over $460 billion, the company said. The third-largest cloud services provider globally, behind Amazon Web Services (AMZN.O), opens new tab and Microsoft's (MSFT.O), opens new tab Azure, has ⁠continued to land major deals, including expanded AI infrastructure partnerships with Meta (META.O), opens new tab and cybersecurity firm Palo Alto Networks (PANW.O), opens new tab. The results underscore Alphabet's position as a key beneficiary of a global surge in spending on artificial intelligence, even as investors remain watchful of whether massive outlays on infrastructure will translate into sustained growth and market share gains. Strong demand for cloud-based AI services continues to outstrip supply across the industry, pushing hyperscalers to accelerate investments in data centers, advanced chips and networking equipment. Alphabet, Microsoft, Amazon and Meta are expected to collectively spend well over $600 billion this year to expand AI capacity, as competition intensifies and companies race to secure computing power. Google Cloud's performance ⁠comes at a time when rivals have delivered mixed signals on growth, helping ease concerns about potential market share losses for Alphabet in the highly competitive cloud market. At the same time, capacity constraints remain a bottleneck across the sector, limiting providers' ability to fully capitalize on AI-driven demand despite aggressive spending plans. Alphabet has also gained traction in its in-house AI ⁠efforts. Its Gemini models, including newer iterations rolled out this year, have seen rising adoption across enterprise and consumer applications, strengthening the company's position in the AI race. A partnership to power Apple's (AAPL.O), opens new tab artificial intelligence features, including upgrades to Siri, is ⁠expected to significantly expand Google's reach across a vast global device base. Alphabet shares have outperformed most Big Tech peers over the past year, supported by growing signs that AI integration is lifting its core search and ⁠advertising businesses. AI-driven features such as AI Overviews and AI Mode continue to boost user engagement, while opening new avenues for monetization. The company has expanded ads within AI-generated responses across multiple markets and said monetization is broadly in line with traditional search. Reporting by Akash Sriram in Bengaluru; Editing by Tasim Zahid Our Standards: The Thomson Reuters Trust Principles., opens new tab

Google cloud growth tops Microsoft and Amazon as all three beat estimates on AI demand

Google Cloud CEO Thomas Kurian speaks at the Google Cloud Next event in San Francisco, April 9, 2019. All three top cloud infrastructure providers surpassed analyst estimates in earnings reports late Wednesday, but Google was the standout, generating its fastest growth rate on record. Google is chasing Amazon Web Services and Microsoft Azure in the public cloud market, which is booming as demand soars for access to artificial intelligence models and services. All three vendors provide a suite of tools for building and running companies' products, and they also offer an array of their own AI models and specialized hardware. "Wow, that was some quarter," Synergy Research analyst John Dinsdale said in an email after the results were released. His firm estimated that cloud infrastructure spending reached $129 billion in the period. "Our forecasts point to sustained strong growth in the years ahead, with AI continuing to drive usage, unlock new use cases, and boost cloud provider revenues," Dinsdale said in Synergy's update. Google Cloud, which includes infrastructure and corporate productivity apps, saw revenue shoot up 63% to $20.03 billion, surpassing StreetAccount's consensus of $18.05 billion. That's by far the strongest rate of growth for any period since Google started breaking out cloud results in 2020. In addition to offering a full infrastructure suite for AI workloads, Google is firmly competing with OpenAI and Anthropic in the market for AI models, as Gemini continues to gain adoption. The company is also seeing accelerating growth from its homegrown tensor processing units (TPUs), which are emerging as an alternative to Nvidia's graphics processing units (GPUs). "Our enterprise AI solutions have become our primary growth driver for cloud for the first time," Alphabet CEO Sundar Pichai said on that company's Wednesday webcast with analysts. Revenue from products built with Google generative AI models grew 800%, Pichai said.

Alphabet increases AI spending but gets rewarded for further proof that it's paying off

Alphabet reported a monster quarter, with revenue more than $2.5 billlion ahead of expectations and earnings nearly doubling the Street estimate. Revenue in the first quarter increased 22% year-over-year to $109.9 billion, well ahead of the $107.2 billion expected, according to LSEG data. Earnings per share surged 82% to $5.11, well ahead of the LSEG-compiled consensus estimate of $2.63. GOOGL YTD mountain Alphabet YTD Shares of the Google parent company jumped more than 6.5% on the print in after-hours trading. As of Wednesday's nearly record-high close of around $350, the stock was already up nearly 12% year to date. Club names Meta Platforms , Amazon , and Microsoft also reported earnings after the bell. Bottom line Alphabet posted beats in search, subscriptions, and cloud -- its three most consequential segments -- that more than offset small misses in YouTube advertising, Networks, and Other Bets. That explains the top-line beat. One notable call out was a 48% increase in cloud revenue, which resulted in an over 200% increase in cloud operating income. As for the phenomenal EPS, the team kept costs under control and realized strong year-over-year margin expansion. The Street was expecting a marginal contraction for the key profit metric. Along with the other clear indicators that artificial intelligence investments are paying off (more on that in a bit), these results are helping investors stomach the massive levels of AI infrastructure spending, even as the team told investors to expect even higher levels in the year ahead. Regarding capital expenditures, Alphabet is now including investments relating to the acquisition of data center and energy infrastructure solutions provider Intersect, which was finalized in March. As a result, Alphabet now sees capex for full-year 2026 between $180 billion and $190 billion, a $5 billion increase at the midpoint, and well above the Street's estimate of just over $175 billion. "We are seeing unprecedented internal and external demand for AI compute resources," CFO Anat Ashkenazi said on the post-earnings conference call. "The investments we are making in AI [are] delivering strong growth, as evidenced by the record revenue and backlog growth in Google Cloud and strong performance in Google services. Looking ahead, these strong results reinforce our conviction to invest the capital required to continue to capture the AI opportunity. As a result, we expect our 2027 capex to significantly increase compared to 2026." This is a perfect example that while Wall Street may be on edge about spending, investors are willing to give management teams a pass, so long as they can consistently demonstrate that those investments are paying off. That's exactly what we're seeing with Alphabet's results, and we are, therefore, increasing our price target to $400 from $350. We are also reiterating our buy-equivalent 1 rating. We think Alphabet should be a staple in any portfolio, but would advise patience Thursday if the after-hours rally were to hold. For the Club, we may very well opt to book some profits around Thursday's open, given our position size and the arch of our purchases since re-initiating a position on Dec. 29, 2025. Shares are up about 30% since their Iran war lows in March. Why we own it Alphabet has gotten its mojo back. The latest Gemini artificial intelligence model wowed investors while drawing attention to Google's custom chips co-designed with Broadcom . Google has also been chosen as Apple 's partner for AI. Put all that together with search still dominating and cloud growth off the charts, Alphabet would be great in any portfolio. Competitors : Amazon , Microsoft , and Meta Platforms Weight in portfolio : 3.27% Most recent buy : April 6, 2026 Initiated : Dec. 29, 2025 Commentary AI experiences helped drive Search usage and queries to an all-time high. Google Cloud growth accelerated to 63% year over year, up from the 48% growth rate we saw in the fourth quarter of last year. Better yet, Google Cloud's backlog nearly doubled on a sequential basis, exiting the quarter at $460 billion. Adoption of the Gemini app resulted in a record quarter for Alphabet's consumer AI offerings. Gemini Enterprise saw paid monthly active users increase 40% sequentially. The number of $100 million to $1 billion deals also doubled versus the year-ago period. Companywide paid subscriptions exited the quarter at 350 million, thanks largely to YouTube and Google One. First-party LLMs, like Gemini, realized a 60% sequential increase in token-per-minute usage to 16 billion. In AI speak, a token is a unit of data. Alphabet's latest generation of tensor processing units (TPUs), co-designed by fellow Club name Broadcom, is delivering 80% better performance versus the prior generation. Waymo, Alphabet's self-driving vehicle initiative, is now doing over 500,000 fully autonomous rides per week. With six new cities launched since the start of the year, Waymo now operates in 11 major cities across the U.S. (Jim Cramer's Charitable Trust is long GOOGL. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Google and Microsoft Just Proved the AI Trade Is Alive -- While OpenAI Is Sweating - Decrypt

OpenAI missed its own internal revenue and user targets in recent months, with CFO Sarah Friar reportedly warning the company may struggle to fund future compute contracts. Microsoft and Alphabet, Google's parent company, both reported earnings after the bell, and both crushed expectations -- on the same day OpenAI's revenue stumbles were still reverberating through the market. The message from the two biggest players in enterprise cloud was hard to miss: The AI trade isn't slowing down. If anything, it's accelerating. Alphabet posted $109.9 billion in Q1 2026 revenue, up 22% from a year ago and the company's fastest growth rate since 2022. Wall Street was expecting around $107.1 billion. The headline number is Google Cloud, which brought in $20.03 billion -- up 63% year-over-year from $12.26 billion in Q1 2025, and nearly $1.6 billion above analyst estimates. CEO Sundar Pichai said enterprise AI solutions had become "our primary growth driver for cloud for the first time in Q1." Microsoft wasn't far behind. The company reported $82.9 billion in revenue for its fiscal Q3 2026, up 18% year-over-year, beating the $81.39 billion estimates. The real number that turned heads: Its AI business surpassed an annual revenue run rate of $37 billion, up 123% from the prior year. Azure and other cloud services grew 40% year-over-year. Microsoft Cloud overall hit $54.5 billion, up 29%. All of this thanks to the magic of the AI boom. Copilot, Microsoft's AI assistant for enterprise, now exceeds 20 million paid users -- up from 15 million just last quarter. CEO Satya Nadella called it the "agentic computing era," which is the kind of phrase you say when your numbers back it up. Gemini is pulling its weight across the board. Earlier this year, Apple signed a multi-year deal to build its next generation of Foundation Models on Google's Gemini, handing the search giant one of the biggest AI endorsements of 2026. Paid monthly active users of Gemini Enterprise grew 40% quarter-over-quarter. Google's Cloud backlog hit $460 billion -- nearly double the prior quarter. All of this lands against the backdrop of OpenAI's bad week. The company missed its own internal targets for both revenue and user growth, with CFO Sarah Friar reportedly telling company leaders she was worried OpenAI might not be able to fund future compute contracts if revenue doesn't pick up fast enough. The market response was swift. CNBC reports that Oracle dropped around 4%, CoreWeave sank more than 5%, and SoftBank -- one of OpenAI's largest investors -- fell roughly 10% during Tokyo trading hours. Nvidia and AMD also slid. The contrast is hard to ignore. While OpenAI is leaning on investors to absorb the gap between ambition and revenue, Google and Microsoft are printing cash from the same AI wave. Gemini 3 Pro, released in November 2025, outpaced its predecessor on every benchmark Google tested, and is now driving commercial demand across the Cloud stack. On the advertising side, Google's total ad revenue came in at $77.25 billion, up 15.5% year-over-year, beating estimates in that field too. YouTube was the one soft spot at $9.88 billion versus the $9.99 billion forecast -- a minor miss in an otherwise clean sweep. Alphabet guided 2026 capital expenditures at $175 billion to $185 billion, up from $91.4 billion in 2025. The $460 billion Cloud backlog may suggest the company expects those bets to keep converting into revenue well into 2027.

Google Cloud Pulls Ahead as Big Tech's AI Bet Swells to $700 Billion

By Aditya Soni and Deborah Mary Sophia April 30 (Reuters) - Alphabet's blowout cloud growth has reset expectations across major ⁠tech ⁠companies, leaving investors to recalibrate which firms are delivering the ⁠clearest returns. All four of the U.S. tech giants that reported results on Wednesday signaled that spending on artificial intelligence would not slow down, with combined outlays now set to surpass $700 billion this year, up from around $600 billion previously. Alphabet shares jumped more than 6% in premarket trading on Thursday, while Meta stock fell nearly 9%. Amazon shares rose 2.6%, while those of Microsoft dipped 1.8%. The reactions underscore a growing divide as the biggest tech companies pour record sums into AI infrastructure, with investors increasingly rewarding those that are translating spending into clear revenue growth. Amazon and Microsoft both reported faster growth in their cloud-computing revenue in ⁠the March quarter at ⁠28% and 40%, respectively. But those paled in comparison to Google Cloud's 63% revenue surge, its best growth yet, which was far above estimates of 50.1%. CEO Sundar Pichai said Google's AI tools for large businesses had become Google Cloud's primary growth driver for the first time, vindicating Alphabet's decision to turn its vast research capabilities into commercial gains. To be sure, Google's cloud business is much smaller than those of Amazon and Microsoft and has only in the past several quarters started to contribute meaningfully to Alphabet's overall revenue. Meta also beat quarterly revenue expectations but warned of potential losses from a global backlash surrounding children's safety on social media, adding to pressure from its ballooning AI spending. "Google's really the shining star so far in tech ⁠earnings," ⁠said Ken Mahoney, CEO of Mahoney Asset Management. GOOGLE ⁠GRABS NEW CLOUD BUSINESS Analysts and investors believe Google is scooping up a large chunk of new computing demand thanks to its AI tools for businesses and powerful custom chips that have attracted customers like Anthropic. Pichai said Google had started selling its AI chips, ⁠which compete with Nvidia's semiconductors, directly to some customers. "It is capturing new workloads for the most part - sometimes from companies new to cloud, often additional workloads from customers of other clouds who want to be less dependent on a single cloud provider or who like Google data, analytics and AI offerings," said Lee Sustar, principal analyst at Forrester. Pichai said cloud growth could have been higher were it not for the industry-wide capacity constraints on computing power that have sparked Big Tech's spending spree. To overcome those shortages, the company bumped its annual capital spending forecast by $5 billion to between $180 billion and $190 billion and said it was ⁠planning another significant increase in 2027. "The risk of sitting it out is bigger than the risk of leaning in," said Daniel Newman, CEO of ⁠tech research firm Futurum Group, referring to the large AI bills. "Every hyperscaler (large cloud company) understands that under-investing in this cycle is an extinction-level risk." Alphabet's rising expenses will bring it closer to Amazon, which stuck with its $200 billion annual spending projection. That somewhat reassured investors who had dumped its stock in January when the forecast was first released. Back-to-back deals deepening Amazon's tie-ups with OpenAI and Anthropic have also lifted shareholder confidence. The company's shares are up roughly 14% this year, as of last close, among the best performers in the "Magnificent Seven" group of tech mega-caps. MICROSOFT CLOUD, OUTLAY FORECASTS EXCEED ESTIMATES After a modest growth pickup in Microsoft's Azure cloud business initially sent shares lower, the company reassured investors with a prediction that revenue there would increase between 39% and 40%, in constant currency terms in its current quarter, better than expectations for 36.7% growth. But the expected revenue acceleration would also come with a surge in spending: its capital outlay for calendar 2026 is expected to total $190 billion. About $25 billion of that spending is coming from rising costs of components ⁠such as chips. "Broad and growing customer demand continues to exceed supply," CFO Amy Hood said of Azure's AI business on a post-earnings call. Microsoft touted user gains for its Copilot AI assistant and said engagement levels for those using the tool equaled that of Outlook. Overall adoption of the Copilot, however, has remained sluggish. "Customers are going to Google because its AI is seen as more accurate and trustworthy than Copilot and because its full-stack approach is likely to drive greater economies of scale," said Rebecca Wettemann, CEO of Valoir, an industry analyst firm, referring to Google's focus on every layer of the AI technology chain including chips, data centers, AI models and developer tools. (Reporting by Aditya Soni and Deborah Sophia in Bengaluru; Editing by Sayantani Ghosh and Thomas Derpinghaus)

Google Cloud pulls ahead as Big Tech's AI bet swells to $700 billion

Alphabet's cloud business is booming, outperforming rivals like Amazon and Microsoft. Tech giants are spending over $700 billion on AI this year. Google's AI tools are driving its cloud growth. Investors are watching closely as companies invest heavily in AI infrastructure. This spending is expected to continue as companies prioritize AI development. Alphabet's blowout cloud growth has reset expectations across major tech companies, leaving investors to recalibrate which firms are delivering the clearest returns. All four of the U.S. tech giants that reported results on Wednesday signaled that spending on artificial intelligence would not slow down, with combined outlays now set to surpass $700 billion this year, up from around $600 billion previously. Alphabet shares jumped more than 6% in premarket trading on Thursday, while Meta stock fell nearly 9%. Amazon shares rose 2.6%, while those of Microsoft dipped 1.8%. The reactions underscore a growing divide as the biggest tech companies pour record sums into AI infrastructure, with investors increasingly rewarding those that are translating spending into clear revenue growth. Amazon and Microsoft both reported faster growth in their cloud-computing revenue in the March quarter at ⁠28% and ⁠40%, respectively. But those paled in comparison to Google Cloud's 63% revenue surge, its best growth yet, which was far above estimates of 50.1%. CEO Sundar Pichai said Google's AI tools for large businesses had become Google Cloud's primary growth driver for the first time, vindicating Alphabet's decision to turn its vast research capabilities into commercial gains. To be sure, Google's cloud business is much smaller than those of Amazon and Microsoft and has only in the past several quarters started to contribute meaningfully to Alphabet's overall revenue. Meta also beat quarterly revenue expectations but warned of potential losses from a global backlash surrounding children's safety on social media, adding to pressure from its ballooning AI spending. "Google's really the shining star so far in tech earnings," said Ken Mahoney, CEO of Mahoney Asset Management. Google grabs new cloud business Analysts and investors believe Google is scooping up a large chunk of new ⁠computing demand thanks to its AI tools for businesses and powerful custom chips that have attracted customers like Anthropic. Pichai said Google had started selling its AI chips, which compete with Nvidia's semiconductors, directly to some customers. "It is capturing new workloads for the most part - sometimes from companies new to cloud, often ⁠additional workloads from customers of other clouds who want to be less dependent on a single cloud provider or who like Google data, analytics and AI offerings," said Lee Sustar, principal analyst at Forrester. Pichai said cloud growth could have been higher were it not for the industry-wide capacity constraints on computing power that have sparked Big Tech's spending spree. To overcome those shortages, the company bumped its annual capital spending forecast by $5 billion to between $180 billion and $190 billion and said it was planning another significant increase in 2027. "The risk of sitting it out is bigger than the risk of leaning in," said Daniel Newman, CEO of tech research firm Futurum Group, referring to the large AI bills. "Every hyperscaler (large cloud company) understands that under-investing in this cycle is an extinction-level risk." Alphabet's rising expenses will bring it closer to Amazon, which stuck with its $200 billion annual spending projection. That somewhat reassured investors who had dumped its stock in January when the forecast was first released. Back-to-back deals deepening Amazon's tie-ups with OpenAI and Anthropic have also lifted shareholder confidence. The company's shares are up roughly 14% this year, as of last close, among the best performers in the "Magnificent Seven" group of tech mega-caps. Microsoft cloud, outlay forecasts exceed estimates After a modest growth pickup in Microsoft's Azure cloud business initially sent shares ⁠lower, the company reassured investors with a prediction that revenue there would increase between 39% and 40%, in constant currency terms in its current quarter, better than expectations for 36.7% growth. But the expected revenue acceleration would also come with a surge in spending: its capital outlay for calendar 2026 is expected to total $190 billion. About $25 billion of that spending is coming from rising costs of components such as chips. "Broad and growing customer demand continues to exceed supply," CFO Amy Hood said of Azure's AI business on a post-earnings call. Microsoft touted user gains for its Copilot AI assistant and said engagement levels for those using the tool equaled that of Outlook. Overall adoption of the Copilot, however, has remained sluggish. "Customers are going to Google because its AI is seen as more accurate and trustworthy than Copilot and because its full-stack approach is likely to drive greater economies of scale," said Rebecca Wettemann, CEO of Valoir, an industry analyst firm, referring to Google's focus on every layer of the AI technology chain including chips, data centers, AI models and developer tools.

Alphabet CEO Sundar Pichai Says Google's Custom Chips, Gemini Models And Cloud Stack Give It Unique AI Ed

Google's Full-Stack AI Strategy Powers Competitive Advantage During the first-quarter earnings call, Pichai spoke about the tech giant's control across the AI ecosystem -- including custom chips, Gemini models, cloud infrastructure, developer tools and security. "We are genuinely differentiated," Pichai said during the company's first-quarter earnings call, describing Google's "vertically optimized AI stack" as a key factor helping it stay ahead in a rapidly intensifying AI race. Pichai added that Google's control over both silicon and software allows it to scale AI efficiently while protecting margins and maintaining security. AI Demand Surges As Google Faces Capacity Constraints Despite strong momentum, Pichai acknowledged that Google is currently struggling to keep pace with soaring AI demand. "We are compute constrained in the near term," he said, noting that Google Cloud revenue could have been even higher if sufficient infrastructure had been available. The company reported an 800% year-over-year increase in enterprise AI solutions, fueled by rising demand for Gemini-powered services, cloud infrastructure and TPU hardware. Internal AI Development Takes Priority During the call, Pichai said Alphabet prioritizes compute resources first toward internal research and development, particularly training frontier AI models such as Gemini, before allocating additional capacity across products like Search, YouTube and enterprise cloud offerings. He said that long-term infrastructure investments are being guided by "tangible demand signals" and a disciplined return-on-investment framework. Alphabet Q1 Earnings Crush Wall Street Alphabet posted first-quarter earnings of $5.11 per share, crushing analyst expectations of $2.62 by more than 95%. Revenue rose to $109.9 billion, topping Wall Street estimates of $106.93 billion and increasing from $90.23 billion a year earlier. Price Action: Alphabet Class A shares rose 7.24% in after-hours trading to $375.29, while Class C gained 7.05% to $371.80, according to Benzinga Pro. According to Benzinga Edge, GOOGL scores in the 95th percentile for Quality, highlighting robust performance across short, medium and long-term metrics. Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo courtesy: Rokas Tenys / Shutterstock.com Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

Google stock price, Alphabet earnings, revenue and profit rise after AI drives quarterly results

Google stock price, Alphabet earnings, revenue and profit became a major topic after the latest quarterly report from Alphabet. The company reported strong growth supported by artificial intelligence, cloud demand, and enterprise partnerships. The earnings beat market estimates and pushed shares higher in extended trading. The report also highlighted rising global demand for AI infrastructure. Investors are watching how spending on data centers and chips will affect long-term growth. The results show how AI is shaping search, ads, cloud, and partnerships across the company. Google stock price, Alphabet earnings, revenue and profit remained in focus after Alphabet reported strong quarterly results driven by artificial intelligence and cloud demand. The company posted $62.6 billion profit and $109.9 billion revenue, beating expectations and showing growth across search, advertising, and cloud. Investors reacted positively as the results confirmed strong demand for AI services and continued enterprise spending on infrastructure. Google stock moved higher in extended trading after the earnings announcement. Shares rose about 4% as investors responded to stronger-than-expected revenue and cloud performance. Over the past year, the stock has gained support from rising AI adoption and improved engagement across search and advertising products, which has helped boost confidence in long-term growth. Alphabet earnings showed strong year-on-year growth, with revenue rising 22% and Google Cloud revenue increasing 63% to $20 billion. The cloud backlog crossed $460 billion, showing long-term enterprise demand. The results highlighted how AI integration across services is helping expand revenue streams while the company continues investing heavily in infrastructure and computing capacity. Google stock price, Alphabet earnings, revenue and profit started the quarter with strong numbers. Alphabet reported profit of $62.6 billion and revenue of $109.9 billion. This result beat expectations and exceeded the same quarter last year. Chief executive Sundar Pichai said AI investments are supporting all business areas. The company is using a full stack AI approach. This includes infrastructure, models, and applications. The results show that AI is now central to the company's strategy. AI features are being used across search, cloud, and advertising. The company also confirmed that monetization of AI features is similar to traditional search ads. The cloud business delivered strong growth during the quarter. Revenue at Google Cloud rose 63% to $20 billion. Analysts expected a 50.1% increase. This shows strong enterprise demand for AI infrastructure. The cloud backlog nearly doubled to more than $460 billion. This backlog represents future revenue from signed contracts. It signals long-term demand from businesses investing in AI services. Alphabet is the third-largest cloud provider. It follows Amazon Web Services and Microsoft Azure. The company continues to compete for enterprise contracts and global cloud market share. Alphabet signed and expanded partnerships with major companies. These include deals with Meta and Palo Alto Networks. These partnerships focus on AI infrastructure and cybersecurity solutions. The company also expects growth from a partnership with Apple. Google will help power AI features on Apple devices. This includes updates to Siri. This partnership could expand Google AI across a global device base. These deals show how AI partnerships are becoming key to competition in the tech sector. Tech companies are spending heavily to expand AI capacity. Alphabet, Microsoft, Amazon, and Meta are expected to spend more than $600 billion this year. Spending will go toward data centers, chips, and networking. Demand for cloud-based AI services continues to exceed supply. This has created capacity constraints across the industry. Providers are racing to build more infrastructure. Investors are watching whether these investments will lead to long-term growth. There are concerns about the cost of expansion. However, strong demand signals long-term opportunity. Alphabet said AI features are increasing engagement across search and advertising. Features like AI Overviews and AI Mode are driving user activity. The company has started placing ads within AI responses. These ads are rolling out in multiple markets. Alphabet said monetization is in line with traditional search ads. This suggests that AI is not replacing search revenue. Instead, AI is creating new revenue opportunities. After the earnings report, shares rose about 4% in extended trading. Investors reacted positively to revenue growth and cloud performance. Alphabet stock has outperformed many large tech companies over the past year. The company has benefited from the global AI spending surge. Investors are still watching risks. These include infrastructure costs, competition, and supply limits. However, the results confirm Alphabet's strong position in the AI race. Alphabet expects AI adoption to continue growing. Its Gemini AI models are seeing wider use in enterprise and consumer apps. These models are helping the company compete in the AI market. Capacity constraints remain a challenge. The industry must expand infrastructure to meet demand. Companies are racing to secure computing power and chips. The latest results show that Alphabet is a major beneficiary of global AI investment. The company is focusing on long-term growth through AI integration across products and services. Q1. How did Google stock react to Alphabet earnings? Google stock moved higher after the earnings report. Shares rose about 4% in extended trading as investors reacted to strong revenue growth, cloud performance, and rising demand for AI services worldwide. Q2. Why is Alphabet investing heavily in AI infrastructure? Alphabet is expanding data centers and chips to meet strong demand for cloud AI services. Demand exceeds supply across the industry, and companies are racing to secure computing power and long-term growth opportunities.

Google parent Alphabet's cloud unit beats quarterly revenue estimates on strong AI demand

Alphabet topped Wall Street estimates for quarterly revenue growth at its cloud computing unit on Wednesday, driven by sustained enterprise spending on artificial-intelligence infrastructure. Shares of the company were up about 4% in extended trading. Alphabet's total revenue rose 22% to $109.9 billion in the first quarter, compared with an estimate of $107.2 billion, according to LSEG data. Revenue at Google Cloud grew 63% to $20 billion in the first quarter ended March, compared with analysts' average estimate ⁠of a ⁠50.1% increase, according to data compiled by LSEG. The cloud unit's backlog nearly doubled quarter on quarter to over $460 billion, the company said. The third-largest cloud services provider globally, behind Amazon Web Services and Microsoft's Azure, has continued to land major deals, including expanded AI infrastructure partnerships with Meta and cybersecurity firm Palo Alto Networks. The results underscore Alphabet's position as a key beneficiary of a global surge in spending on artificial intelligence, even as investors remain watchful of whether massive outlays ⁠on infrastructure will translate into sustained growth and market share gains. Strong demand for cloud-based AI services continues to outstrip supply across the industry, pushing hyperscalers to accelerate investments in ⁠data centers, advanced chips and networking equipment. Alphabet, Microsoft, Amazon and Meta are expected to collectively spend well over $600 billion this year to expand AI capacity, as competition intensifies and companies race to secure computing power. Google Cloud's performance comes at a time when rivals have delivered mixed signals on growth, helping ease concerns about potential market share losses for Alphabet in the highly competitive cloud market. At the same time, capacity constraints remain a bottleneck across the sector, limiting providers' ability to fully capitalize on AI-driven demand despite aggressive spending plans. Alphabet has also gained traction in its in-house AI efforts. Its Gemini models, including newer iterations rolled out this year, have seen rising adoption across enterprise and consumer applications, strengthening ⁠the company's position in the AI race. A partnership to power Apple's artificial intelligence features, including upgrades to Siri, is expected to significantly expand Google's reach across a vast global device base. Alphabet shares have outperformed most Big Tech peers over the past year, supported by growing signs that AI integration is lifting its core search and advertising businesses. AI-driven features such as AI Overviews and AI Mode continue to boost user engagement, while opening new avenues for monetization. The company has expanded ads within AI-generated responses across multiple markets and said monetization is broadly in line with traditional search.

AI could take capex to $1Tn in CY27 By Investing.com

Investing.com -- A new industry report from BofA Global Research suggests that aggressive investments in artificial intelligence (AI) could drive global hyperscale capital expenditure (capex) to $1 trillion by calendar year 2027. Analysts note that major U.S. technology firms are significantly raising their spending outlooks as AI sales accelerate and supply constraints for high-end compute hardware persist through 2026. The upward revision follows first-quarter earnings reports from leading hyperscalers, including Alphabet (GOOGL), Microsoft (MSFT), Amazon (AMZN), and Meta Platforms (META). BofA now forecasts that combined hyperscale capex will exceed $800 billion in 2026, a 67% year-over-year increase, before crossing the $1 trillion threshold the following year. The surge in spending is backed by rapidly growing AI revenue streams across the major cloud providers. Alphabet is now generating over 16 billion Gemini tokens per minute, with its search segment growing 19% due to AI-integrated queries. Meanwhile, Microsoft reported an annualized AI sales run-rate exceeding $37 billion, which marks a 123% increase year-over-year. Amazon's AWS has also seen its fastest growth in over three years at 28%, driven largely by AI workloads and strategic partnerships. To meet the rising demand, the tech firms have substantially increased their 2026 capex guidance. Microsoft raised its outlook to $190 billion, up from a prior market expectation of $154 billion, while Amazon maintained a strong guidance of $200 billion. Alphabet and Meta also adjusted their projected spends upward to $185 billion and $135 billion, respectively. A critical component of the increased capex is the rising cost of hardware, which the report indicates is being absorbed by the hyperscalers. Microsoft specifically noted that $25 billion of its 2026 capex increase is attributed to higher component pricing. The current environment grants significant pricing power to semiconductor vendors, who can pass on rising costs for wafers, memory, and substrates to their customers. Key beneficiaries of the sustained spending cycle include compute giants like Nvidia (NVDA), as well as firms specializing in memory, optics, semicaps, and power semiconductors required to support massive data center expansions. The report highlights that hyperscalers are currently placing equal emphasis on both merchant GPUs and custom silicon deployments. Supply for AI compute is expected to remain tight throughout 2026, and the data suggests that strong customer commitments and improving free cash flow will continue to justify the historic levels of investment.

TrendForce raises 2026 capex forecasts for cloud giants to $830bn

This acceleration is all the more striking as it follows an already robust trend observed over recent years. After a slight 2% decline in 2023, capex for the nine major global cloud service providers surged by 58% in 2024 and 70% in 2025, and are now expected to grow by 79% in 2026. In other words, the pace of expansion continues to intensify despite an increasingly high comparison basis. In absolute terms, spending is projected to have risen from $172.6bn in 2023 to $272bn in 2024, then to $462.7bn in 2025, before reaching $830bn in 2026. Following Q1 financial results, North American hyperscalers have emerged as the primary drivers of this revision. Microsoft has raised its investment spending forecasts to $190bn, representing a y-o-y increase of about 130%, while Google is now targeting between $180bn and $190bn. Meta has also lifted its guidance to $125bn-$145bn, while AWS is expected to exceed $230bn this year. Beyond the headline figures, the composition of this spending indicates that AI is becoming a long-term infrastructure theme rather than a mere server cycle, according to TrendForce, a market research and consulting firm specializing in the technology sector. Investments are concentrated on GPU clusters, in-house developed ASIC chips, power supply systems, and data centers capable of supporting higher power density. TrendForce estimates that global installed data center capacity will reach approximately 155 GW in 2026, a 29% increase. In this context, the favorable cycle no longer concerns only advanced semiconductors but also extends to electrical equipment, high-voltage direct current solutions, and liquid cooling, for which demand could continue to grow with the next generations of AI servers expected in 2027 and 2028.