Google Profit Jumps 81% as Cloud Business Booms

Like I was saying, this AI stuff is just a bunch of hype.

Google Profit Jumps 81% as Cloud Business Booms

Artificial intelligence is ‘lighting up every part of the business,’ Chief Executive Sundar Pichai says

By Katherine Blunt, WSJ

Updated April 29, 2026

Alphabet reported a 22% surge in first-quarter revenue to about $110 billion, fueled by its cloud business and AI race.

Google parent company Alphabet GOOGL 0.05%increase; green up pointing triangle reported a 22% surge in first-quarter revenue as the artificial intelligence race fuels growth of its cloud business.

Alphabet’s sales reached about $110 billion, exceeding analyst expectations. Net income was $62.6 billion, an 81% increase compared with the same period a year earlier.

The costly bet that Alphabet has made on AI appears to be paying off, with enterprise AI solutions and demand for computing power driving cloud unit growth. The company said its cloud backlog ballooned to $460 billion, up from $240 billion in the prior quarter.

AI is “lighting up every part of the business,” said Chief Executive Sundar Pichai.

Like other tech giants, Alphabet is spending heavily to advance its AI models and build data centers needed to train and run them. The company revised its estimates for capital expenditures this year to $180 billion to $190 billion, up from $175 billion to $185 billion.

Google’s Cloud division, which sells access to AI platforms and computing power, has grown significantly as the company works to expand its customer base. The Cloud unit had $20 billion in first-quarter revenue, a 63% increase from the same period in 2025.

The company said its cloud backlog growth was driven by demand for its enterprise AI tools and its custom chips, known as Tensor Processing Units, or TPUs. It expects to record about half of the backlog as revenue over the next two years.

Google CEO Sundar Pichai speaks at the Google I/O conference in front of a screen displaying "Gemini 2.5 Pro."

Google CEO Sundar Pichai Andrej Sokolow/Zuma Press

“These strong results reinforce our conviction to invest the capital required to continue to capture the AI opportunity,” Anat Ashkenazi, chief financial officer, told investors and analysts on Wednesday. “We expect our 2027 capex to significantly increase compared to 2026.”

Shares rose more than 6% in post-market-close trading after earnings results were announced.

The company last week upped the ante in the battle to develop fast and efficient AI chips by unveiling the eighth generation of TPUs. It introduced a chip customized for inference, the type of computing needed to respond to user queries, and a separate chip customized for training AI models.

Google also said Wednesday it would begin selling chips directly to some customers in addition to offering access to them through its Cloud platform, a move that has the potential to substantially boost its chip business. It said it expects to see a small amount of revenue from direct sales this year, with more to come in 2027.

Google last year pulled ahead in the AI race with the November launch of Gemini 3, the most powerful version of its AI model and chatbot. It outperformed competing models on benchmark tests, scoring a range of intelligence categories.

OpenAI’s ChatGPT remains the most popular chatbot, with more than 900 million weekly users. But The Wall Street Journal reported this week that the company last year missed its annual revenue target, in part because Gemini ate into ChatGPT’s market share.

Shares in Alphabet rose 65% last year and are up about 10% this year. The company earlier this year joined Nvidia in reaching a $4 trillion valuation.

In addition to developing Gemini, Google has been working to revamp its classic search engine with AI capabilities. The company last year rolled out “AI Mode,” which searches and responds in a chatbot-like exchange with fewer links. And many traditional searches now produce an “AI Overview” that summarizes results at the top of the page.

The company reported about $60.4 billion in quarterly search revenue, up about 19% from the same quarter last year.

Google last year avoided harsh antitrust penalties in a federal lawsuit targeting its search monopoly. U.S. District Judge Amit Mehta ruled that the company can’t pay to be the exclusive search engine on devices and browsers but rejected more damaging penalties sought by the government.

The Justice Department, which brought the case against Google in 2020, had proposed forcing the sale of its Chrome browser, among other things. The judge said such measures weren’t necessary in part because the AI race had already made the search market more competitive.

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