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GOOGL Q1 Earnings Beat on Cloud Surge and AI Momentum, Revenues Up Y/Y
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Key Takeaways
GOOGL Q1'26 EPS hit $5.11; revenues rose 21.8% to $109.9B, led by Search and Cloud.
GOOGL Cloud revenues surged 63% to $20B; backlog reached about $462B, with over half due in 24 months.
GOOGL raised 2026 capex view to $180B-$190B for AI compute and Wiz; dividend lifted 5% to 22 cents.
Alphabet (GOOGL - Free Report) delivered first-quarter 2026 earnings of $5.11 per share, up 82% year over year and ahead of the Zacks Consensus Estimate by 93.6%. Consolidated revenues rose 21.8% year over year to $109.9 billion.
Net revenues excluding traffic acquisition costs (the portion of revenues shared with Google’s partners and the amount paid to distribution partners and others who direct traffic to Google’s website) came in at $94.67 billion, topping the Zacks Consensus Estimate of $92.22 billion by 2.7%. Strength across Search and a sharp acceleration in Google Cloud, alongside rising AI-driven subscription adoption, stood out this quarter. A key theme in management’s commentary was the company’s “full stack” AI approach, spanning custom silicon, infrastructure and first-party models.
GOOGL’s Services Ride on Search & YouTube
Google Services revenues increased 16% year over year to $89.64 billion, supported by broad-based advertising and subscription growth. Search & other revenues rose 19.1% year over year to $60.4 billion, with management citing AI experiences as a catalyst for higher usage and queries at an all-time high. Google advertising revenues increased 15.5% year over year to $77.25 billion and accounted for 70.3% of total revenues.
Within advertising, YouTube ads grew 10.7% to $9.88 billion, while Google Network revenues declined 4% to $6.97 billion. Subscriptions, Platforms and Devices revenues climbed 19.3% year over year to $12.38 billion, reflecting continued momentum in YouTube subscriptions and Google One, including increased demand for consumer AI plans.
Other Bets’ revenues were $411 million, down 8.7% year over year, and accounted for 0.4% of first-quarter revenues.
Google Cloud Benefits From Enterprise Adoption
Google Cloud revenues surged 63% year over year to $20 billion and accounted for 18.2% of the quarter’s total revenues.
Management attributed the acceleration to strong performance across Google Cloud Platform, enterprise AI solutions, enterprise AI infrastructure and core services such as cybersecurity and data analytics. The quarter also featured a sharp step-up in contracted demand, with Cloud backlog reaching roughly $462 billion at quarter end.
In Google Cloud, management noted that TPU hardware agreements are included in the reported backlog, though the majority remains typical GCP contracts, with just over half of the backlog expected to be recognized as revenues over the next 24 months.
GOOGL’s Operating Margin Expands Y/Y
Alphabet posted operating income of $39.7 billion, up 29.7% year over year, with operating margin expanding 220 basis points to 36.1%. The company’s cost structure reflected heavier investment, as total costs and expenses increased 18% year over year to $70.2 billion, including a 26% jump in research and development spending.
Segment-wise, Google Services’ operating margin of 45.3% expanded 300 bps year over year.
Google Cloud delivered standout execution and profitability improved meaningfully, as Cloud operating income climbed to $6.6 billion and operating margin expanded to 32.9%, up from 17.8% a year earlier.
Other Bets reported a loss of $2.1 billion compared with $1.23 billion in the year-ago quarter.
Alphabet’s Balance Sheet Remains Strong
As of March 31, 2026, cash, cash equivalents, and marketable securities were $126.84 billion compared with $126.843 billion reported on Dec. 31, 2025.
Long-term debt was $77.501 billion as of March 31, 2026, compared with $46.547 billion as of Dec. 31, 2025.
The quarter’s operating cash flow reached $45.8 billion, but capital intensity remained elevated, with capital expenditures totaling $35.7 billion, largely directed to technical infrastructure to support AI opportunities.
Free cash flow was $10.1 billion in the reported quarter. The board also approved a 5% increase in the quarterly dividend to 22 cents per share.
Alphabet Raises Capital Expenditure
For 2026, Alphabet now expects to spend capital expenditures between $180 billion and $190 billion (up from previous guidance of $175 billion and $185 billion), reflecting heightened demand for AI compute and incremental investment tied to the Wiz acquisition.
The company also said it expects a low single-digit percentage point headwind to Cloud operating margin for the remainder of 2026 related to the Wiz acquisition, which closed in March and will be reported in the Google Cloud segment.
Sandisk is set to report its third-quarter fiscal 2026 results on April 30. Fabrinet is set to report its third-quarter fiscal 2026 results on May 4. Reddit is set to report its first quarter 2026 results on April 30.
Year to date (YTD), shares of Sandisk and Fabrinet have jumped 348.3% and 41.3%, respectively. Reddit shares have dropped 35.7% YTD.
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GOOGL Q1 Earnings Beat on Cloud Surge and AI Momentum, Revenues Up Y/Y
Key Takeaways
Alphabet (GOOGL - Free Report) delivered first-quarter 2026 earnings of $5.11 per share, up 82% year over year and ahead of the Zacks Consensus Estimate by 93.6%. Consolidated revenues rose 21.8% year over year to $109.9 billion.
Net revenues excluding traffic acquisition costs (the portion of revenues shared with Google’s partners and the amount paid to distribution partners and others who direct traffic to Google’s website) came in at $94.67 billion, topping the Zacks Consensus Estimate of $92.22 billion by 2.7%. Strength across Search and a sharp acceleration in Google Cloud, alongside rising AI-driven subscription adoption, stood out this quarter. A key theme in management’s commentary was the company’s “full stack” AI approach, spanning custom silicon, infrastructure and first-party models.
GOOGL’s Services Ride on Search & YouTube
Google Services revenues increased 16% year over year to $89.64 billion, supported by broad-based advertising and subscription growth. Search & other revenues rose 19.1% year over year to $60.4 billion, with management citing AI experiences as a catalyst for higher usage and queries at an all-time high. Google advertising revenues increased 15.5% year over year to $77.25 billion and accounted for 70.3% of total revenues.
Within advertising, YouTube ads grew 10.7% to $9.88 billion, while Google Network revenues declined 4% to $6.97 billion. Subscriptions, Platforms and Devices revenues climbed 19.3% year over year to $12.38 billion, reflecting continued momentum in YouTube subscriptions and Google One, including increased demand for consumer AI plans.
Alphabet Inc. Price, Consensus and EPS Surprise
Alphabet Inc. price-consensus-eps-surprise-chart | Alphabet Inc. Quote
Other Bets’ revenues were $411 million, down 8.7% year over year, and accounted for 0.4% of first-quarter revenues.
Google Cloud Benefits From Enterprise Adoption
Google Cloud revenues surged 63% year over year to $20 billion and accounted for 18.2% of the quarter’s total revenues.
Management attributed the acceleration to strong performance across Google Cloud Platform, enterprise AI solutions, enterprise AI infrastructure and core services such as cybersecurity and data analytics. The quarter also featured a sharp step-up in contracted demand, with Cloud backlog reaching roughly $462 billion at quarter end.
In Google Cloud, management noted that TPU hardware agreements are included in the reported backlog, though the majority remains typical GCP contracts, with just over half of the backlog expected to be recognized as revenues over the next 24 months.
GOOGL’s Operating Margin Expands Y/Y
Alphabet posted operating income of $39.7 billion, up 29.7% year over year, with operating margin expanding 220 basis points to 36.1%. The company’s cost structure reflected heavier investment, as total costs and expenses increased 18% year over year to $70.2 billion, including a 26% jump in research and development spending.
Segment-wise, Google Services’ operating margin of 45.3% expanded 300 bps year over year.
Google Cloud delivered standout execution and profitability improved meaningfully, as Cloud operating income climbed to $6.6 billion and operating margin expanded to 32.9%, up from 17.8% a year earlier.
Other Bets reported a loss of $2.1 billion compared with $1.23 billion in the year-ago quarter.
Alphabet’s Balance Sheet Remains Strong
As of March 31, 2026, cash, cash equivalents, and marketable securities were $126.84 billion compared with $126.843 billion reported on Dec. 31, 2025.
Long-term debt was $77.501 billion as of March 31, 2026, compared with $46.547 billion as of Dec. 31, 2025.
The quarter’s operating cash flow reached $45.8 billion, but capital intensity remained elevated, with capital expenditures totaling $35.7 billion, largely directed to technical infrastructure to support AI opportunities.
Free cash flow was $10.1 billion in the reported quarter. The board also approved a 5% increase in the quarterly dividend to 22 cents per share.
Alphabet Raises Capital Expenditure
For 2026, Alphabet now expects to spend capital expenditures between $180 billion and $190 billion (up from previous guidance of $175 billion and $185 billion), reflecting heightened demand for AI compute and incremental investment tied to the Wiz acquisition.
The company also said it expects a low single-digit percentage point headwind to Cloud operating margin for the remainder of 2026 related to the Wiz acquisition, which closed in March and will be reported in the Google Cloud segment.
Zacks Rank & Upcoming Earnings to Watch
Alphabet currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Computer and Technology sector that are set to report their quarterly results are Sandisk (SNDK - Free Report) , Fabrinet (FN - Free Report) and Reddit (RDDT - Free Report) . Sandisk and Fabrinet sport a Zacks Rank #1 (Strong Buy) each at present, while Reddit has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Sandisk is set to report its third-quarter fiscal 2026 results on April 30. Fabrinet is set to report its third-quarter fiscal 2026 results on May 4. Reddit is set to report its first quarter 2026 results on April 30.
Year to date (YTD), shares of Sandisk and Fabrinet have jumped 348.3% and 41.3%, respectively. Reddit shares have dropped 35.7% YTD.