In a strong earnings update reflecting rising artificial intelligence demand, Alphabet reported robust growth in its cloud computing division, beating Wall Street revenue expectations for the quarter.
The company’s shares rose about 4% in extended trading after the results were announced. Alphabet’s total revenue climbed 22% year-on-year to $109.9 billion in the first quarter, exceeding analyst estimates of $107.2 billion, according to LSEG data.
A major highlight was Google Cloud, which posted a 63% revenue jump to $20 billion for the quarter ended March. This outpaced analyst expectations of a 50.1% rise. The company also revealed that its cloud backlog nearly doubled quarter-on-quarter to more than $460 billion, indicating strong future demand.
Google Cloud remains the third-largest global cloud provider after Amazon Web Services and Microsoft Azure. It continues to win major contracts, including expanded AI infrastructure partnerships with Meta and cybersecurity firm Palo Alto Networks.
The results highlight Alphabet’s growing advantage in the global AI boom, even as investors track whether heavy infrastructure spending will translate into long-term gains. Across the industry, demand for AI cloud services is exceeding supply, prompting hyperscalers to scale up investments in data centres, chips, and networking systems.
Alphabet, Microsoft, Amazon, and Meta are expected to collectively spend more than $600 billion this year on AI infrastructure expansion.
Despite strong momentum, capacity constraints continue to limit how quickly cloud providers can fully monetise AI demand. However, Alphabet has also gained traction in its AI efforts through its Gemini models, which are seeing wider adoption across enterprise and consumer use cases.
The company’s partnership with Apple to support AI features, including upgrades to Siri, is expected to further expand its ecosystem reach.
Alphabet has also benefited from AI integration in its core search and advertising business. Features like AI Overviews and AI Mode are improving engagement, while opening new monetisation channels. The company has also expanded advertising within AI-generated responses across multiple markets, with monetisation reportedly aligned with traditional search performance.
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