TLDR
- Alphabet stock has risen roughly 130% over the past 12 months, with a current market cap of $4.6 trillion.
- Q1 2026 revenue hit $109.9 billion, up 22% year over year — the fastest growth in 16 quarters.
- Google Cloud revenue jumped 63% year over year, with a $462 billion customer backlog.
- Gemini monthly active users topped 650 million, up 45% quarter over quarter.
- Capital expenditure is set to hit $180–$190 billion in 2026, raising questions about long-term returns.
Alphabet (GOOGL) stock is trading around $383, up roughly 130% over the past 12 months. That makes it one of the best-performing mega-cap names of the past year, now carrying a market cap of $4.6 trillion — second only to Nvidia.
The run has been fueled by one thing above all else: AI momentum that is showing up in the actual numbers.
In Q1 2026, Alphabet posted revenue of $109.9 billion, a 22% year-over-year increase that beat Wall Street estimates. It was the fastest revenue growth the company had seen in 16 quarters.
Google Search revenue rose 19% year over year. Chief Business Officer Philipp Schindler pointed to AI Overviews and AI Mode as key drivers of higher query volumes, including in commercial searches.
YouTube ad revenue grew nearly 11%, and Waymo is now completing more than 500,000 rides per week.
Google Cloud Is the Standout
Google Cloud was the clear highlight of the quarter. Revenue jumped 63% year over year — faster than both Amazon Web Services and Microsoft Azure.
The segment ended Q1 with a $462 billion customer backlog, nearly double the figure from three months prior. Analysts are projecting 60% year-over-year cloud revenue growth for the full fiscal year 2026, which would beat consensus estimates by around 11%.
Backlog growth accelerated to 82% in recent quarters, up from 37% in the prior period — a number that points to strong future revenue visibility.
Gemini Gaining Ground
The Gemini AI application now has more than 650 million monthly active users, up 45% quarter over quarter. Mobile daily active users grew 14%, and monthly traffic rose 18%.
The Gemini 3.0 launch was well-received, easing some concerns about search disruption. Potential upside includes consumer subscription services and a possible Apple Siri integration.
Alphabet’s operating margin came in at 39.7% when adjusted for a $3.5 billion European Commission fine — ahead of analyst expectations.
The company trades at a price-to-earnings ratio of around 29.6. Analysts project diluted earnings per share to grow at a compound annual rate of roughly 17% between 2025 and 2028. Fiscal year 2026 revenue is forecast at $479.86 billion, rising to $561.50 billion in 2027. Thirty analysts have revised earnings estimates upward for the upcoming period.
The Spending Question
None of this comes cheap. Alphabet spent $91 billion on capital expenditure in 2025 and is targeting $180–$190 billion in 2026. CFO Anat Ashkenazi has said capex will increase further in 2027.
The company is also planning to expand compute capacity to 35 gigawatts by 2028. Analysts estimate capex could reach $124 billion in 2026 as infrastructure investment continues.
Higher depreciation from that spending will weigh on margins in future periods. Analysts expect strong cloud and search growth to offset the pressure, but the return on that investment is still the key variable to watch.
Wells Fargo has a $387 price target and an Overweight rating on the stock, while BofA carries a Buy with a $335 target.
🚨 Our MAY Stock Picks Are Live!
A new month means new opportunities. Our analysts have just released their top stock picks for May, highlighting companies with strong momentum that rank highly on our KO Score algorithm. We’re also now sharing trade ideas for both long-term and short-term investors, giving you more ways to spot potential opportunities in the market.
Sign up to Knockout Stocks today and get 50% off to unlock the full list and see which stocks made the cut.
Use coupon code Special50 for your exclusive discount!
Be the first to comment