Alphabet, the parent company of Google, delivered an impressive set of results to start 2026. Driven by AI, all business lines have accelerated significantly, with both revenue and profits surpassing the same period last year by a wide margin. The cloud business grew at an exceptional rate of 63%.
In the first quarter, Alphabet's total revenue increased by 22% year-over-year to USD 109.9 billion, marking the 11th consecutive quarter of double-digit growth.
Net profit surged 81% year-on-year to $62.6 billion, with diluted earnings per share reaching $5.11. This includes unrealized book gains of approximately $36.9 billion from non-liquid equity securities. Excluding this one-time item, core operational profitability still showed significant improvement. Operating profit rose 30% year-on-year to $39.7 billion, with operating margin expanding by about 2 percentage points to 36.1%.
Chief Executive Officer Sundar Pichai stated, "AI is lighting up every corner of our business."
Search query volumes reached record highs, with search revenue growing by 19%. Gemini-powered consumer AI initiatives delivered the strongest quarterly performance ever, bringing the company’s total paid subscriptions to 350 million. Google Cloud’s order backlog nearly doubled quarter-on-quarter to over $460 billion, while monthly active paying users of Gemini Enterprise Edition grew by 40% quarter-on-quarter.
In terms of capital expenditures, the company's first-quarter capital spending soared from $17.2 billion in the same period last year to $35.7 billion. Additionally, it raised approximately $31.1 billion through the issuance of senior unsecured bonds and completed major acquisitions worth over $33 billion.
The Alphabet board of directors announced a 5% increase in the quarterly dividend to $0.22 per share, payable on June 15.
Following the release of the financial report,$Alphabet-A (GOOGL.US)$Shares rose 7% in after-hours trading following the earnings release.
Cloud business accelerates significantly, with order backlog nearly doubling.
Google Cloud's revenue in the first quarter reached 20 billion US dollars, a year-on-year increase of 63%. The growth rate showed a significant improvement compared to the same period last year. The company attributed this to strong demand for enterprise AI solutions, enterprise AI infrastructure, and core GCP services.
More crucially, the scale of cloud business order backlogs nearly doubled on a quarterly basis to exceed 460 billion US dollars, providing robust visibility for future revenue recognition.
In terms of profitability, Google Cloud achieved an operating profit of 6.6 billion US dollars in the first quarter, marking a substantial increase from 2.2 billion US dollars in the same period last year. The profit margin saw significant improvement, reflecting the gradual emergence of economies of scale.
Alphabet separately disclosed AI R&D-related shared expenses as corporate-level activity spending. This item amounted to 5.4 billion US dollars in the first quarter, representing an approximately 80% increase from 3 billion US dollars in the same period last year, underscoring the company’s continued investment in foundational AI model research and development.
The Gemini series models now process over 16 billion tokens per minute through direct API calls, a 60% increase from the previous quarter.
Search maintains steady growth, with subscriptions and advertising advancing on multiple fronts.
Google Services' revenue in the first quarter increased by 16% year-on-year to 89.6 billion US dollars, while operating profit grew by 24% to 40.6 billion US dollars.
Revenue from core search and other businesses grew by 19% year-on-year to 60.4 billion US dollars. Sundar Pichai noted that AI-powered experiences are continuously driving up user query volumes, which have reached record highs.
YouTube's advertising revenue increased by 11% year-on-year to 9.9 billion US dollars; subscription, platform, and device business revenue rose by 19% year-on-year to 12.4 billion US dollars, driven by consumer subscription products such as YouTube TV, YouTube Music, and Google One.
The company’s total number of paid subscriptions has reached 350 million, with YouTube and Google One being the primary growth drivers.
Google Network advertising revenue slightly declined year-over-year from USD 7.3 billion to USD 7.0 billion, marking the only segment within Google Services to record a decline.
Waymo, the autonomous driving subsidiary, achieved over 500,000 fully autonomous rides per week this quarter, a milestone Sundar Pichai highlighted in the earnings statement as noteworthy.
The Other Bets segment reported revenue of USD 411 million for the first quarter, down from USD 450 million in the same period last year, with income primarily driven by autonomous ride-hailing services and internet offerings; operating losses widened from USD 1.2 billion to USD 2.1 billion year-over-year.
The company's total headcount increased from 185,719 employees a year ago to 194,668 employees.
Net profit surged significantly, driven mainly by investment book gains.
The high growth rate of the company's Q1 net profit of USD 62.6 billion was significantly amplified by a one-off factor: other income (net) recorded USD 37.7 billion, primarily reflecting unrealized book gains of approximately USD 36.9 billion from non-liquid equity securities; the after-tax impact of this gain was approximately USD 28.7 billion, adding USD 2.35 to diluted earnings per share.
Excluding this impact, the improvement in core operating profit remained robust—operating margin expanded by approximately 2 percentage points year-over-year to 36.1%, with absolute operating profit increasing by 30%.
The company did not execute any stock repurchases this quarter, compared to USD 15.1 billion in repurchases during the same period last year. On April 27, the board approved a 5% increase in the quarterly cash dividend to USD 0.22 per share, payable to all registered shareholders on June 15, 2026.
Capital expenditure doubled amid aggressive borrowing and completion of significant acquisitions.
Capital expenditure for the first quarter reached USD 35.7 billion, nearly double the USD 17.2 billion from the same period last year, reflecting the company’s large-scale expansion in AI infrastructure.
The company raised approximately USD 31.1 billion net proceeds through the issuance of senior unsecured bonds for general corporate purposes during the same period, with long-term debt increasing from USD 46.5 billion at the end of 2025 to USD 77.5 billion accordingly.
M&AIn terms of acquisitions, net expenditures for acquisitions (net of cash received) and purchases of intangible assets in the first quarter amounted to approximately USD 33.6 billion. The balance sheet shows that goodwill increased from USD 33.4 billion at the beginning of the year to USD 57.8 billion, while net intangible assets surged from USD 1.3 billion to USD 9.4 billion, indicating that the company completed significant acquisition deals during this quarter. The financial report did not provide further disclosure on specific transaction details.
Despite a substantial expansion in investment scale, the company's operating cash flow in the first quarter still reached USD 45.8 billion.Free cash flowapproximately USD 10.1 billion.
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