Alphabet reports better than rivals: cloud revenue up 63%, stock soars

Investors reacted enthusiastically to Alphabet's quarterly report as the company reported a 63% increase in revenue for its Google Cloud division. In addition, the company likely included a revalued stake in SpaceX in its adjusted earnings per share: Google owns approximately 6% of Elon Musk's space company. The hyperscaler also said it will significantly ramp up spending on artificial intelligence in 2027.

Alphabet shares jumped more than 7% in extended trading on April 29 following the release of its quarterly earnings. The securities have risen 21% this month, outperforming the rest of the "Magnificent Seven" stocks, CNBC notes.

Alphabet's revenue in the first quarter from Google Cloud service grew 63% year-on-year to $20.02 billion. Analysts, according to StreetAccount, expected growth to $18.05 billion, CNBC writes.

"In the first quarter, our enterprise AI solutions were the primary driver of cloud business growth for the first time," CEO Sundar Pichai said in a call with analysts, CNBC reported. Gemini Enterprise's paid monthly active AI audience grew 40 percent from the previous quarter, Pichai said in the filing.

The company said that Google Cloud's growth was fueled by an increase in Google Cloud Platform (GCP) revenue in its enterprise AI solutions and enterprise AI infrastructure segments. The company said Google Cloud's order book is $460 billion.

"In the near term, we are limited by computing capacity," Pichai said at the conference call. - Our cloud business revenue would be higher if we could meet the demand."

- Google's parent company's total revenue rose 19% last quarter to $109.9 billion, the highest quarterly growth rate since 2022, CNBC notes. Wall Street, according to LSEG, predicted revenue of $107.2 billion, the channel writes.

- Adjusted earnings per share, according to Google, amounted to $5.11, adding 82% at once. Analysts expected the figure to be at $2.63, notes CNBC. This discrepancy is likely due to the revaluation of assets of Elon Musk's space startup SpaceX: Google owns approximately 6% of the company, notes Investor's Business Daily. Alphabet reflected in the report EPS growth due to a one-time gain from equity investments, but did not explain what exactly gave such an effect.

- Alphabet's net income for the quarter was $62.58 billion, up 81% year-over-year.

- Google's advertising revenue totaled $77.25 billion, up 15.5% from a year ago.

- Google's search revenue grew 19% to $60.4 billion, Pichai explained to investors that the introduction of AI features in search has increased search queries to an all-time high.

- Advertising revenue from YouTube totaled $9.88 billion, slightly behind StreetAccount's estimate of $9.99 billion. Traffic acquisition costs totaled $15.22 billion, while analysts expected $15.3 billion.

- Revenue at Other Bets, which includes drone car developer Waymo, fell 8.7% year-on-year to $411 million, while Waymo continued to increase its operating performance, with the service exceeding 500,000 rides per week in the quarter. In February, Waymo announced that it had raised $16 billion in a new round of financing, bringing the company's valuation to $126 billion.

- Alphabet's first-quarter capex was $35.7 billion. The company raised its 2026 capex forecast to a range of $180-190 billion versus its previous estimate of $175-185 billion, and said it expects "significant increases" in spending in 2027.

This article was AI-translated and verified by a human editor