Alphabet tops Q1 estimates as Google Cloud revenue tops $20 billion

Alphabet’s first-quarter results showed a company that is turning AI demand into real cloud revenue, but not at the expense of its search engine. Google Cloud topped $20 billion for the first time, rising 63% from a year earlier to about $20.0 billion, while Search and Other revenue still climbed 19%, underscoring that Alphabet’s cash-generating core remains powerful even as the company pours more money into AI.

Total revenue reached $109.9 billion, above the $107.2 billion estimate cited by CNBC and Reuters. Shares rose about 4% in extended trading after the report, a sign investors saw the quarter as evidence that Alphabet’s AI spending is starting to pay off. The company also said Google Cloud backlog nearly doubled from the prior quarter to more than $460 billion, a striking figure that points to longer-term enterprise demand rather than a one-quarter spike.

The cloud numbers matter because they have become the clearest evidence that Alphabet can monetize AI beyond search ads. Sundar Pichai said enterprise AI solutions became the primary growth driver for cloud in the quarter, marking a shift in how Google Cloud is selling itself to customers. He also said Gemini Enterprise paid monthly active users grew 40% quarter over quarter, paid subscriptions reached 350 million, and Alphabet’s first-party models were processing more than 16 billion tokens per minute through direct API use.

Alphabet is responding to that demand by spending more aggressively. It raised its 2026 capital expenditure guidance to $180 billion to $190 billion, up from $175 billion to $185 billion, and chief financial officer Anat Ashkenazi said 2027 capex is expected to “significantly increase” versus 2026. That escalation shows how central AI infrastructure has become to Alphabet’s strategy, even as investors continue to watch margins and returns closely.

The competitive backdrop is just as important. Reuters said Alphabet remains the third-largest cloud provider globally, behind Amazon Web Services and Microsoft Azure, and that it has been landing major AI-related deals, including expanded partnerships with Meta and Palo Alto Networks. Alphabet also completed its acquisition of Wiz on February 12, adding more cloud-security depth to a business that is increasingly being measured not just by growth, but by whether it can defend share in a capital-intensive AI market.

The quarter’s message was clear: Search is still doing heavy lifting, but Google Cloud is becoming Alphabet’s most visible AI monetization engine. With cloud revenue accelerating, backlog swelling and capex rising again, the company is betting that the same AI buildout pressuring margins today will widen its lead in enterprise computing tomorrow.