Alphabet shares surge as Google Cloud delivers record revenue growth
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The news: Alphabet shares surged after it posted its best quarter in years, with Google Cloud delivering record growth and net income more than doubling as the company’s years of AI investment began paying off in earnest.
The numbers: Shares rose over 6% in after-hours trading in New York.
Cloud revenue surged 63% to USD20 billion and above analyst estimates from LSEG of 50% growth. Consolidated operating income in the unit also tripled to USD6.6 billion. The company said the contracted backlog nearly doubled from the prior quarter to over USD460 billion in a sign that enterprise demand for AI computing power is not slowing.
Total revenue rose 22% to USD109.9 billion, beating expectations, while net income surged 81% to USD62.6 billion.
Search also had a strong quarter, with queries at an record high and revenue growing 19% to USD60.4 billion, the company said.
What they said: Alphabet raised its 2026 capital expenditure forecast to between USD180 billion and USD190 billion.
Chief financial officer Anat Ashkenazi told analysts in the call that the investment would “continue to put pressure on [profits] in the form of higher depreciation expense and related data centre operations costs such as energy,” the FT reported.
In the company’s release, CEO Sundar Pichai said: “Our AI investments and full-stack approach are lighting up every part of the business.”
The sources: Alphabet, The Wall Street Journal, Financial Times
