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GOOGL
Alphabet Inc.
Earnings
GOOGL | Earnings Review
Alphabet Inc. Class A | 2026 Q1 reported April 29, 2026 AMC | Analysis date: April 29, 2026 | Daloopa company_id 87
Revenue Beat
+2.9%
$109.9B vs $106.8B Street; +21.8% YoY (+19% cc) — fastest since 2021
Operating EPS Beat
+5.3%
~$2.76 ex-equity-gain vs $2.62 Street; GAAP $5.11 includes ~$2.35 of unrealized equity gains
Google Cloud
+63% YoY
$20.0B (+8.9% vs Street); margin 32.9% vs 17.8% PY; backlog $460B+ (~50% conv. in 24 mos)
FY26 Capex
RAISED to $180–190B
From $175–185B; 2027 "significantly higher"; AI subs = 350M paid users (new disclosure)
Broadest acceleration in years on a clean operating print. Alphabet posted $109.9B in revenue (+21.8% YoY, +19% cc), the fastest growth since 2021, with re-acceleration across all three reporting drivers: Search +19.1%, YouTube ads +10.7% (vs comp headwind), and Google Cloud +63.4% — the highest Cloud print ever. Op margin expanded +220 bps YoY to 36.1%, Cloud op margin reached 32.9% (vs 17.8% PY). The headline EPS beat of +95% (GAAP $5.11 vs $2.62 Street) is contaminated by ~$37.7B of unrealized equity gains; the clean operating EPS beat is roughly +5%. Management raised FY26 capex to $180–190B (from $175–185B) — raise driven by Intersect acquisition closing rather than organic step-up — and Anat explicitly said "2027 CapEx will significantly increase compared to 2026." Cloud backlog disclosed at $462B (vs $310B Q4'25), with ~50% conversion targeted over 24 months and "the majority of TPU hardware revenues to be realized in 2027." Wiz margin headwind quantified: "low single-digit pp headwind to Cloud's operating margin for the remainder of 2026." Capex split: ~60% servers / ~40% data centers + networking. Token throughput stepped up: first-party models now process >16B tokens/min via direct API (vs ~10B last quarter, ~+60% QoQ); Gemini 3 reduced cost of core AI responses by 30%+. Sundar acknowledged: "our cloud revenue would have been higher if [we] were able to meet the demand" — capacity-gated. Other call-only datapoints: 350M paid AI subscribers; named TPU customers Thinking Machines Lab, Hudson River Trading, Boston Dynamics; Gemini Enterprise paid customers Bosch, Cityweft, Merck, Mars; UCP merchants Sephora, Macy's, Ulta Beauty live; AI Mode pilot signs GAP, L'Oreal, Chewy. Watch items: (1) clean EPS beat is ~$0.14, not $2.49 — frame to PMs accordingly; (2) Wiz Cloud margin headwind through balance of 2026; (3) TPU hardware mostly 2027-loaded; (4) FX gave +200 bps cc tailwind, may reverse; (5) antitrust remedies remain asymmetric tail risk. Net read: AI capex ROIC debate has the strongest single-quarter answer Alphabet has delivered, and management quantified the previously-fuzzy parts (2027 capex direction, Wiz margin drag, TPU revenue timing).
Key Metrics Trends
| Metric | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | Q1 2026 |
|---|---|---|---|---|---|---|---|---|---|
| Search & other | $46.2B | $48.5B | $49.4B | $54.0B | $50.7B | $54.2B | $56.6B | $63.1B | $60.4B |
| Search & other YoY % | - | - | - | - | +9.8% | +11.7% | +14.5% | +16.7% | +19.1% |
| YouTube ads | $8.1B | $8.7B | $8.9B | $10.5B | $8.9B | $9.8B | $10.3B | $11.4B | $9.9B |
| YouTube ads YoY % | - | - | - | - | +10.3% | +13.1% | +15.0% | +8.7% | +10.7% |
| Google Network | $7.4B | $7.4B | $7.5B | $8.0B | $7.3B | $7.4B | $7.4B | $7.8B | $7.0B |
| Google Network YoY % | - | - | - | - | -2.1% | -1.2% | -2.6% | -1.6% | -3.9% |
| Google Services | $70.4B | $73.9B | $76.5B | $84.1B | $77.3B | $82.5B | $87.1B | $95.9B | $89.6B |
| Google Services YoY % | - | - | - | - | +9.8% | +11.7% | +13.8% | +14.0% | +16.0% |
| Google Cloud | $9.6B | $10.3B | $11.4B | $12.0B | $12.3B | $13.6B | $15.2B | $17.7B | $20.0B |
| Google Cloud YoY % | - | - | - | - | +28.1% | +31.7% | +33.5% | +47.8% | +63.4% |
| Total revenue | $80.5B | $84.7B | $88.3B | $96.5B | $90.2B | $96.4B | $102.3B | $113.8B | $109.9B |
| Total revenue YoY % | - | - | - | - | +12.0% | +13.8% | +15.9% | +18.0% | +21.8% |
| Operating income | $25.5B | $27.4B | $28.5B | $31.0B | $30.6B | $31.3B | $31.2B | $35.9B | $39.7B |
| Operating income YoY % | - | - | - | - | +20.2% | +14.0% | +9.5% | +16.0% | +29.7% |
| Diluted EPS | $1.89 | $1.89 | $2.12 | $2.15 | $2.81 | $2.31 | $2.87 | $2.82 | $5.11 |
| Diluted EPS YoY % | - | - | - | - | +48.7% | +22.2% | +35.4% | +31.2% | +81.9% |
| Capex | $12.0B | $13.2B | $13.1B | $14.3B | $17.2B | $22.4B | $24.0B | $27.9B | $35.7B |
| Capex YoY % | - | - | - | - | +43.2% | +70.2% | +83.4% | +95.1% | +107.4% |
| Free cash flow | $16.8B | $13.5B | $17.6B | $24.8B | $19.0B | $5.3B | $24.5B | $24.6B | $10.1B |
| Free cash flow YoY % | - | - | - | - | +12.6% | -60.6% | +38.7% | -1.2% | -46.6% |
Trajectory: Revenue YoY accelerated for 5 consecutive quarters from a +12.0% trough in Q1'25 to +21.8% in Q1'26 — broadest re-accel since 2021. Cloud stair-stepped +28.1% → +63.4% over the same window, with the largest single-quarter step (+1,560 bps QoQ) into Q1'26. Search re-accelerated to +19.1%, the fastest since 2022. Op margin +220 bps YoY despite peak capex/depreciation pressure signals real operating leverage from AI-Search efficiency and Cloud unit economics, not just FX (+200 bps cc tailwind). EPS YoY of +82% headline is contaminated by ~$37.7B unrealized equity gains; the clean operating EPS trajectory has held in the +20–30% YoY band — strong but less spectacular than the GAAP print suggests.
Beat/Miss
Guidance
Catalysts
Street Q&A
Contradictions
Read-Throughs
This Quarter vs Consensus
| Metric | Consensus | Actual | Variance | Read |
|---|---|---|---|---|
| Revenue | $106.8B (Bloomberg/LSEG) | $109.9B | +$3.1B / +2.9% | Beat — second-largest in 8Q window |
| Reported revenue YoY | n/a | +21.8% | — | Highest growth since 2021 |
| Constant-currency revenue YoY | n/a | +19% | — | +200 bps FX tailwind in reported |
| GAAP Diluted EPS | $2.62 | $5.11 | +$2.49 / +95% | Beat — but ~$2.35 from unrealized equity gains; contaminated |
| Operating EPS (ex equity gain, est.) | ~$2.62 | ~$2.76 | +$0.14 / +5.3% | Clean read — modest operating beat |
| Google Cloud revenue | $18.4B | $20.0B | +$1.6B / +8.9% | Beat — 4th consecutive Cloud beat, magnitude widening |
| Cloud op margin | ~28% | 32.9% | +~490 bps | Beat — vs 17.8% PY, biggest single-Q step |
| Operating margin (consol.) | ~34.5% | 36.1% | +160 bps | Beat — leverage despite capex/depreciation |
| Search & other revenue | ~$58.5B | $60.4B | +$1.9B | Beat |
| YouTube ads | ~$9.6B | $9.9B | +$0.3B | In-line / slight beat (lapping election ad comp) |
| L8Q rev beat rate | — | 7/8 = 88% | — | Consistent Beater |
| L8Q operating-EPS beat rate | — | 8/8 = 100% | — | Consistent Beater |
Pattern: Consistent Beater — magnitude widening on Cloud, stable on Search. Alphabet has now beaten revenue in 7 of 8 (88%) and operating-EPS in 8 of 8 (100%). L4Q rev beat = +2.6% (L8Q = +1.85%); Cloud beat 4/4 in L4Q with magnitude inflecting from in-line to +9% in Q1'26. Variance drivers, ranked: (1) Cloud capacity unlocking (+1,560 bps YoY accel), (2) AI-Search ad relevance lift on complex/long queries, (3) Op margin leverage despite cost step-up, (4) FX tailwind (~+200 bps cc-vs-reported), (5) Wiz consolidating into Cloud reporting. Caveat: the GAAP +95% EPS beat will headline financial media, but PMs should mark the print at +5.3% on operating EPS — anchoring on $2.49 surprise overstates the operational beat by ~17x.
Guidance Deep Dive
| Metric | Prior View (Q4'25) | New Frame (Q1'26) | vs Prior | Read |
|---|---|---|---|---|
| FY2026 Capex | $175–185B | $180–190B | +$5B at midpoint | RAISED |
| 2027 Capex | Above 2026 (qualitative) | "Significantly higher than 2026" | Reaffirmed direction, sharper tone | RAISED tone |
| Cloud backlog | $310B | $460B+ | +$150B QoQ | Major positive |
| Backlog conversion timing | n/a | ~50% in next 24 months | New disclosure | Visibility booster |
| AI Subscribers (paid) | Not disclosed | 350M | New disclosure | Consumer AI monetization |
| Cloud margin path | Modest expansion expected | Q1 actual 32.9%; Wiz a low-SD-pp headwind ahead | Inline with framework | Watch as Wiz integrates |
| TPU hardware revenue mix | 2027-weighted | Reaffirmed 2027-weighted | — | Backlog ≠ 2026 revenue |
| Revenue/EPS guide | Not provided (policy) | Not provided (policy) | — | Watch capex/Cloud as proxy |
| Cost pressure narrative | Depreciation, energy, hiring | Same; Q1 op margin still +220 bps YoY | Pressure not yet visible | Asymmetric: late-2026 risk |
Tone: materially more confident than Q4'25. Last quarter, the debate was whether $175–185B of capex could earn a return; this quarter management answered with proof points — Cloud +63% YoY, Cloud margin 32.9%, $460B+ backlog, Search +19%, AI Subs 350M. The capex framing shifted from defensive ("ROIC framework") to leaning forward ("demand exceeds supply", explicit 2027 step-up). Hedging language around AI returns has decreased; discussion of backlog conversion has increased. Caveats reduced overall. Watch-outs: (1) op-margin commentary on the call still includes the depreciation/energy/hiring cost pressures that *did not* show up in Q1 — implies the pressure lands later in 2026 or 2027; (2) Cloud margin will absorb a low-single-digit-pp Wiz headwind, so Q3'26 Cloud margin is the next pressure test; (3) management deliberately would not quantify TPU hardware share of $460B backlog or contract-level Cloud margins — read as residual model debate.
Upcoming Catalysts
| # | Catalyst | Timing | Watch | Read |
|---|---|---|---|---|
| 1 | Google I/O 2026 | May 19, 2026 | Gemini Ultra/Agent updates, AI Mode-in-Search expansion, agentic commerce demos | Highest narrative impact — sets monetization roadmap for AI Search |
| 2 | YouTube Brandcast / upfronts | May 13, 2026 | Advertiser commits; CTV/connected-TV growth narrative | Tests if YouTube +11% can re-accelerate; living-room budgets |
| 3 | MSFT (Apr 30) + AMZN (May 1) prints | This week | Azure / AWS YoY growth + capex tone | Cross-validates GCP +63% durability and AI-cloud demand breadth |
| 4 | Cloud backlog conversion | 2026–2027 | $460B+ backlog; ~50% in 24 months | Largest visibility lever; 2027-loaded for TPU hardware |
| 5 | FY26 capex execution | Quarterly through 2026 | $180–190B; Q1 already $35.7B run-rate | Core debate: AI ROIC vs FCF compression |
| 6 | Wiz integration (in Cloud) | 2026 | Low-single-digit-pp Cloud margin headwind | Strategic positive (security TAM); near-term margin watch |
| 7 | TPU hardware to 3rd parties | Late 2026 → 2027 | Selective customer roll-out | Expands TAM; 2027 revenue tail |
| 8 | Antitrust remedies | 2026 | Search distribution, app-store, ad-tech | Asymmetric tail risk — default-search deal value at stake |
| 9 | AI Subscriptions monetization | 2026 | 350M paid users; ARPU ramp | Consumer AI revenue stream — investor under-appreciated |
| 10 | FX reversal risk | 2026 2H | Q1 had +200 bps cc tailwind | Could trim reported growth if USD strengthens |
Street Q&A
| # | Analyst (Firm) | Topic | Mgmt Response | Quality |
|---|---|---|---|---|
| 1 | Brian Nowak (Morgan Stanley) | Search compute ROIC + TPU 3rd-party pricing strategy | Sundar: agentic Search is "huge opportunity ahead… very early innings". On TPU sales: direct sales to capital-markets firms and frontier AI labs; "we are opportunistic about it… some of it helps us get more economies of scale" — framed as scale economics, not standalone profit center | Mostly Answered |
| 2 | Doug Anmuth (JPMorgan) | 2027 CapEx trajectory vs $462B backlog; Search query coverage runway | Anat: declined to quantify 2027 — "we expect our 2027 CapEx to significantly increase compared to 2026". Philipp: "upside in [coverage] number" — Gemini intent understanding monetizes "longer, more complex searches that were previously really difficult to monetize" | Mostly Answered |
| 3 | Eric Sheridan (Goldman) | AI infra differentiation; UCP impact | Sundar: "only provider in the market that offers all of these vertical stack" — owns frontier models + silicon. Philipp: agentic is "additive"; UCP designed so consumers no longer "choose between speed and certainty" | Well Answered |
| 4 | Ross Sandler (Barclays) | Price/volume as AdWords transitions to agentic | Philipp deflected on price/vol — focused on UX (apparel try-on, Lens). "All else will follow if we pay attention to the points I mentioned" | Partial — deflected |
| 5 | Michael Nathanson (MoffettNathanson) | Compute allocation framework internal vs external; ads in Gemini app | Sundar: GDM is "core principle", then long-range plans for Search/YouTube/Cloud; "our cloud revenue would have been higher if you were able to meet the demand." Philipp: focus on AI Mode monetization — "a format that works well in AI Mode would transfer successfully to Gemini app… we're not rushing" | Well Answered |
| 6 | Mark Shmulik (AllianceBernstein) | Are AI tools shrinking purchase journeys / driving conversion? | Philipp: framed as "expansionary moment" — query growth, AI Mode, Lens, Circle to Search, Search Live, Translate; declined to dimensionalize behavior change | Partial — deflected |
| 7 | Ron Josey (Citi) | Cloud margin expansion drivers vs AI-revenue-lower-margin thesis | Anat: top-line leverage, "scientific process innovation" in datacenters/servers, AI/coding internally, real estate footprint optimization. Credited Thomas Kurian. Flagged ongoing depreciation headwind | Well Answered |
| 8 | Ken Gawrelski (Wells Fargo) | Supply-chain inflation in 26/27 capex; Search subscription monetization | Sundar: factoring complicated supply chain into commentary. On Search: "already provide various tiers of subscription plans" with access to more powerful Gemini models — sets up to serve premium use cases including in Search | Mostly Answered |
| 9 | Justin Post (BofA) | TPU opportunity sizing; margins on $100M+ generative AI cloud deals | Sundar: "tremendous interest" across GPU and TPU; "in a constrained environment… we are working off a robust ROIC framework." Anat: TPU hardware in $462B backlog, small revenue this year, "majority… realized as revenue in 2027" | Partial — deflected on margins |
Contradictions
| # | Topic | Severity | Statement A | Statement B | Why incompatible (or just tension) |
|---|---|---|---|---|---|
| 1 | ROIC-disciplined capex vs "demand exceeds supply, 2027 significantly higher" | Minor — tension only | Q4'25 + Q1'26: capex governed by ROIC framework | Q1'26: "Cloud rev would have been higher with more capacity. 2027 capex significantly higher." | Compatible while backlog converts and Cloud margins hold. If Cloud margin compresses below ~25% as Wiz integrates and TPU hardware mix grows, ROIC framing becomes harder to defend. Watch Cloud margin into Q3'26. |
| 2 | AI Overviews monetization tone shift | Minor | Prior calls: "User value first, monetization to follow" on AI Overviews | Q1'26: AI improves intent, expands ad coverage on complex queries (implicit ARPU lift) | Tone has shifted positive but magnitude undisclosed. Not a contradiction — but management is now claiming monetization without sizing it. |
| 3 | "Rising depreciation, energy, hiring pressure" vs +220 bps margin expansion | Moderate — modeling-relevant | Q4'25 + repeated: depreciation, energy, AI hiring pressure operating margin | Q1'26 actual: op margin +220 bps YoY | Not a contradiction — but margin expansion this quarter despite the flagged pressure means either (a) Search-AI operating leverage is bigger than Street modeled or (b) cost pressure peaks later. Both options skew positive near-term but raise asymmetric late-2026 EPS risk. |
Indirect Read-Throughs
| Name | Relationship | What GOOGL said | Read-through |
|---|---|---|---|
| NVIDIA (NVDA) | Supplier | "Will offer Vera Rubin NVL72 alongside Blackwell + Hopper instances" | POSITIVE — GPU demand survives at the world's biggest TPU shop |
| Broadcom (AVGO) | TPU silicon partner | Implicit in capex + TPU narrative | POSITIVE — every $10B of TPU build = AVGO supply chain |
| Microsoft (MSFT) | Peer / Cloud competitor | UCP Tech Council member; cross-validates enterprise AI | Cross-validation: Apr 30 print is the benchmark. If Azure < +30% with similar capex, GCP narrative widens. |
| Amazon (AMZN) | Peer / Cloud competitor | UCP member; AWS pace into May 1 | Same-sector read; AWS YoY vs GCP +63% sets relative narrative |
| Meta (META) | UCP member | Validates ad-tech standards collaboration | Neutral — collaborative on agentic commerce standards |
| AMD | Implied multi-vendor accelerator strategy | Continues across Hopper/Blackwell/TPU | Neutral-positive |
| Power IPPs (CEG, VST, TLN) | Energy supply | Capex commentary explicitly factors energy + supply chain | POSITIVE — 2027 capex step-up implies multi-year power demand |
| Networking (ANET, VRT, ETN) | Datacenter buildout | Capex flow-through | POSITIVE |
| Enterprise SW (SNOW, MDB, DDOG, NOW, CRM) | Cloud-native demand | "Enterprise AI now the primary Cloud growth driver" | POSITIVE — cloud-native AI workloads scaling |
| Salesforce, Stripe, Shopify, Etsy, Target, Wayfair | UCP partners | Founding UCP retailers / tech council members | POSITIVE — agentic commerce + ad-tech standards adoption |
| American Express (AXP) | BigQuery customer | Migrating data platform to BigQuery | Positive enterprise data cloud signal |
| Vodafone | Telecom GCP customer | Network ops automation on GCP | Telecom AI use cases scaling |
| Shell, Deloitte, Priceline | Wiz customers | Agentic security adoption | Wiz expanding into Tier-1 enterprise |
| Walmart, DoorDash | Wing partners | Delivery partnerships | Other Bets monetization optionality |
| Apple (AAPL) | Default-search partner | Antitrust remedy overhang | YELLOW FLAG — if remedy disrupts, AAPL Services takes a hit |
| Ad agencies / DSPs (TTD, MGNI, PUBM) | Adjacent ad-tech | AI-Search captures more share; UCP standardizes ad surface | Mixed — share concentration vs standardization |
| Retail/FS/Health verticals | Macro ad demand | "Greatest contribution to Search growth" | POSITIVE macro ad demand read |
| Thinking Machines Lab, Hudson River Trading, Boston Dynamics | Named TPU customers | Sundar: "Our TPUs continue our leadership in performance, cost and power efficiency for customers like…" | POSITIVE — first explicit TPU customer names |
| Bosch, Cityweft, Merck, Mars Inc. | Gemini Enterprise paid customers | Cited as "major global brands" using Gemini Enterprise | Positive enterprise validation |
| Sephora, Macy's, Ulta Beauty | UCP merchants | Sephora and Macy's joined as UCP merchants; Ulta went live with agentic e-commerce in AI Mode/Gemini | POSITIVE — agentic commerce live in retail |
| GAP, L'Oreal, Chewy | AI Mode pilot partners | Newly signed up for Direct Offers in AI Mode pilot | Positive ad-tech expansion |
| Kingfisher, Target, Wayfair | Multi-year Cloud + Ads anchors | Closed significant multi-year Cloud and Ads deals in Q1 | Positive — cross-sell working |
| Hilton (HLT) | AI MAX customer | Captured 1/3 more clicks for 1/5 of spend; +55% avg booking value | Positive marketing-tools case study |
| Etsy (ETSY) | Search ad customer | 10% search volume uplift; 15% net-new queries | Positive |
| Waymo / Other Bets | Owned business | 6 new cities in 2026; 11 total US cities; 500K+ rides/week (doubled in <1yr) | POSITIVE Other Bets monetization optionality |
Data sourced from Daloopa. Document search is currently in beta; transcript and filing snippets may vary.