Alphabet Inc. (GOOG, GOOGL), the parent company of Google, is scheduled to announce its first-quarter financial results on Wednesday. Investors are expected to pay close attention to updates regarding its Gemini large language model, Google Cloud revenue, and capital expenditure plans. The market widely views Alphabet as one of the major beneficiaries in the artificial intelligence sector this year.
Over the past six months, Alphabet's stock has climbed approximately 30%, outperforming Amazon.com (AMZN), which rose 13%, and significantly surpassing Microsoft (MSFT), which declined about 20% over the same period.
This notable increase is largely attributed to the strong performance of Google Cloud and the ongoing rollout of the Gemini AI model. Google Cloud revenue has shown accelerating growth over recent quarters, with sales surpassing $176.6 billion in the fourth quarter of last year, and there are no immediate signs of a slowdown.
Market projections indicate Google Cloud revenue for the first quarter could reach $184 billion, representing a year-over-year increase of 50%.
According to Bloomberg consensus estimates, Alphabet is expected to report earnings per share of $2.62 and total revenue of $1.07 trillion for the quarter. Revenue excluding traffic acquisition costs is anticipated to be around $920 billion. In the same period last year, Alphabet reported earnings per share of $2.81 on revenue of $902.3 billion.
Google's advertising business revenue is forecasted to hit $762 billion, a 13.9% increase from the prior year. YouTube advertising revenue is projected to be $99.6 billion.
Capital expenditures for the quarter are expected to surge significantly, with Wall Street anticipating spending of $363.9 billion, a 111% jump compared to the year-ago period.
Ahead of the earnings report, Alphabet unveiled several major AI initiatives at the Google Cloud Next '26 conference last week, introducing two new AI chips: the TPU 8t and the TPU 8i.
Earlier this month, the company also announced collaborations with AI startup Anthropic and Broadcom, committing to provide Anthropic with several gigawatts of computing power using its TPU resources. The first batch of processors is scheduled to become operational next year.
These in-house chip development efforts intensify competition with partners such as NVIDIA (NVDA) and Advanced Micro Devices (AMD).
In a research note, Morgan Stanley analyst Brian Nowak expressed anticipation for more detailed strategic insights from Alphabet's management regarding the future of its TPU business. He suggested that the current stock price does not fully reflect the value of the TPU segment, which he believes could become a significant growth driver for the company by 2027.
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