Google Cloud revenue growth hits 63% in Q1 to $20 billion

Google Cloud appears to be gaining share as its revenue growth surged 63% in the first quarter to $20 billion.

Alphabet CEO Sundar Pichai reiterated the integrated AI stack theme that emerged from Google Cloud Next 2026. “Gemini Enterprise has great momentum with 40% quarter on quarter growth in paid monthly active users,” said Pichai. “These outstanding results are built on our differentiated, full stack approach. Our first-party models, like Gemini, are now processing more than 16 billion tokens per minute via direct API use by our customers, up 60% from last quarter.”

The company overall reported first quarter net income of $62.6 billion, or $5.11 a share, on revenue of $109.9 billion, up 22% from a year ago. It’s unclear how much of Alphabet’s net income gains were due to investments in companies like Anthropic. Alphabet in the first quarter reported a net gain of $36.9 billion due to its net equity holdings.

Wall Street expected Alphabet to report non-GAAP first quarter earnings of $2.63 a share on revenue of $107.03 billion.

Google Cloud delivered operating income of $6.6 billion, well ahead of last year’s tally.

Google Cloud Next coverage:

• Google Cloud Next 2026: A look at the big themes
• Google Cloud presses full-stack AI edge with new TPUs, Agentic Data Cloud, Gemini Enterprise Agent Platform
• Google Cloud CEO Kurian on AI model evolution, CPUs importance and being open
• How Verizon manages AI agent sprawl
• Citigroup's wealth unit launches Citi Sky, a Google-powered wealth advisor
• The big picture behind Ask Macy’s, a Gemini powered AI agent
• Merck inks Google Cloud agentic AI deal worth up to $1 billion

Pichai said the following on the earnings call:

• "Our engineers are now orchestrating fully autonomous digital tasks and building at a faster velocity."
• "We continue to invest in improvements to AI Overviews, which are driving overall search growth, and we're also seeing strong growth in both users and usage of AI Mode globally."
• "Google Cloud is differentiated because we are the only provider to offer first party solutions across the entire enterprise AI stack. Our growth and revenue operating margin and backlog highlights this differentiation. Our enterprise AI solutions have become our primary growth driver for cloud."
• "TPUs are viewed overall as an opportunity for Google Cloud but at times it's direct sales of TPU hardware to a select group of customers. We take an ROIC approach and some of it helps us get more economies of scale in our overall compute environment."
• "We are unique in the market because of our vertically optimized AI stack and the way we co-develop the components from our infrastructure and models to platforms and the tools to applications and agents. The fact we have our own frontier models and own the silicon, really helps us stay ahead of the curve."

CFO Anat Ashkenazi said the company will continue to spend heavily on capital expenses in 2026 and into 2027. For 2026, capital expenditures will be $180 billion to $190 billion, up from the previous $175 billion to $195 billion.

She said:

"We are seeing unprecedented internal and external demand for AI compute resources, the investments we're making in AI is delivering strong growth, as evidenced by the record revenue and backlog growth in Google Cloud and strong performance in Google services. Looking ahead, these strong results reinforce our conviction to invest the capital required to continue to capture the AI opportunity and the result, we expect our 2027 capex to significantly increase compared to 2026."

By the numbers:

• Alphabet said Google Services delivered operating income of $40.59 billion, which led to overall results.
• Google Search and other revenue was $60.4 billion.
• YouTube add revenue in the first quarter was $9.88 billion.
• Google Cloud backlog doubled to over $460 billion.
• Paid subscriptions are now 350 million driven by YouTube and Google one.
• Waymo topped 500,00 fully autonomous rides a week.