Alphabet investors have been openly worried that the company's enormous spending on artificial intelligence might not be paying off. The latest earnings report should ease those concerns.
Cloud revenue surges on enterprise AI
Google's cloud business is booming, largely thanks to enterprise AI adoption. Google Cloud revenue jumped 82% compared to the same quarter last year, reaching $24.8 billion. That figure beat Wall Street expectations of $22.46 billion and topped last quarter's already strong 63% growth to $20 billion.
The company attributed those gains to enterprise AI solutions and infrastructure adoption. Google also noted that its cloud contracting backlog, work that has not yet been converted into revenue, climbed to $514 billion.
Profit and revenue soar
Alphabet's profit reached $112.1 billion, a massive increase from $28.1 billion in the same period last year. Overall revenue grew 24% year-over-year to $119.8 billion. Google Services revenue rose 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."
Gemini adoption grows
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More people are using Gemini, Google's AI chatbot. The app now has 950 million monthly active users, up from 750 million in the fourth quarter of 2025.
Consistent growth streak continues
Spiking revenue is not unusual for Google. This marks the company's 12th consecutive quarter of double-digit revenue growth. Even by that standard, this quarter stands out as particularly strong.
Capital expenditures remain high
Alphabet's spending remains substantial. The company's capital expenditures, which cover building data centers, buying chips, and expanding infrastructure, are estimated between $180 billion and $190 billion for the year. Analysts pressed Pichai on when those investments will pay off.
"I think our compute capacity investments in '27," he said. "We are seeing strong demand indicators, including long-term deals. 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."