Alphabet investors have long voiced concern that the company’s heavy AI spending is not generating sufficient return. The latest earnings report suggests they may now feel a little less anxious.
Google Cloud revenue rose 82% compared to the same period last year, reaching $24.8 billion. This figure exceeds the previous quarter’s growth rate of 63% and surpasses Wall Street expectations of $22.46 billion.
Enterprise AI solutions and infrastructure adoption drove these gains. The company also noted that its backlog of unconverted cloud contracts climbed to $514 billion.
Profit hit $112.1 billion, up from $28.1 billion a year ago. Alphabet’s total revenue grew 24% to $119.8 billion, while Google Services revenue increased 15% to $94.5 billion.
“Our AI investments are redefining what’s possible across every part of our business,” said Google CEO Sundar Pichai during Wednesday’s earnings call. “We have exciting momentum across the board.”
Adoption of Gemini, Google’s AI chatbot, continues to grow. The app now has 950 million monthly active users, up from 750 million in the fourth quarter of 2025.
Spiking revenue is not unusual for the firm. This marks the 12th consecutive quarter of double-digit growth. Even by that standard, the current period represents a particularly strong performance.
Alphabet’s spending remains high. Capital expenditures, covering data centre construction, chip purchases, and infrastructure expansion, are estimated between $180 billion and $190 billion for the year. Analysts questioned Pichai on the timeline for returns during the call.
“I think our compute capacity investments in ’27,” he said. “We are seeing strong demand indicators, including long-term deals,” he continued. “I think, if anything, the dynamics look healthier than where we were about a year ago, so that’s what gives us the confidence to undertake those investments,” he said.
What it means
For businesses buying cloud services, the market is shifting toward tools that integrate deeply with enterprise systems. Users of Gemini are seeing steady growth in daily engagement. The company is betting that heavy investment in data centres and chips will pay off over the next few years.
