Alphabet Inc. reported high demand for its cloud and artificial intelligence offerings, boosting shares and giving investors confidence that its unprecedented investments in AI infrastructure are paying off.
Google’s parent company said first-quarter revenue, excluding partner payouts, was $94.7 billion, exceeding analysts’ expectations of $91.6 billion. The company reported earnings per share of $5.11, nearing double Wall Street’s had projected.
Alphabet shares jumped 7.6% to $376.35 in early trading in New York on Thursday. The stock had risen 12% this year through Wednesday’s close.
The results worked to ease investors’ concerns that Google’s main line of business — profiting off of answering people’s questions through search — would be taken over by rivals in the chatbot age. Instead, the company has charged ahead to transform its search business and leverage its data to build AI models and tools.
Google’s cloud business, which only became profitable three years ago, continues to grow quickly, accelerated by demand for AI software and infrastructure. The Gemini chatbot app and enterprise tools are gaining in popularity. And search queries reached an all-time high after Google integrated AI tools, Chief Executive Officer Sundar Pichai said on a call with analysts Wednesday.
“AI has enhanced search, not killed it,” Andrew Rocco, a strategist at Zacks Investment Research, wrote in an email. “Google has masterfully integrated AI into its search offering.”
The company raised its outlook for capital expenditures this year. It now plans to spend as much as $190 billion, up from a previous estimate of $185 billion, which was already double what it spent in 2025. And Chief Financial Officer Anat Ashkenazi signaled that outlays in 2027 will be “significantly” higher.
“These strong results reinforce our conviction to invest the capital required to continue to capture the AI opportunity,” she said.
Google has managed to drive down the cost of answering users’ questions with AI, Pichai said, addressing another one of investors’ early concerns about the impact that generative AI would have on the company.
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, above the $18.4 billion that analysts had projected. The unit saw a “meaningful acceleration in growth,” driven by demand for its AI software and infrastructure, Google said in a statement.
Backlog — the measure of contracted work that hasn’t been recorded as revenue yet — nearly doubled from the prior quarter to over $460 billion, the company said.
“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,” Pichai said. “We are working through that moment and investing.”
For select customers, Google will start to offer tensor processing units to use in their own data centers — a move which will expand the addressable market, Pichai said on a call with investors. TPUs are one of the best alternatives to Nvidia Corp.’s chips, and have become a coveted resource as companies hunt for computing power to keep up with demand for AI.
Google also saw strong demand for its AI software. The number of paid monthly active users for Gemini Enterprise, a platform for AI agents, rose 40% from the previous quarter, Pichai said. The Gemini chatbot for consumers had 750 million users at the end of 2025.
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The company also said it would increase its dividend by 5% to 22 cents quarterly.
Google has managed to keep consumers in the habit of going to its search page as chatbots from startups such as OpenAI and Anthropic become more popular. The company now delivers AI-generated answers in response to many searches — a shift that has had major implications for how companies that rely on Google traffic make money.
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In prior quarters, Alphabet’s profit has also been boosted by recording a higher value of its investments in private companies, including SpaceX, which is planning an initial public offering later this year. Anthropic said last week that Google will invest as much as $40 billion in the startup.
Google’s relationship with both companies has also grown competitive: SpaceX now owns xAI, Elon Musk’s artificial intelligence and chatbot company. Internally, Google leaders have grown increasingly worried about falling behind Anthropic in AI coding, as the startup’s offering, Claude Code, becomes a breakout hit product.
