Alphabet Inc. saw its stock inch higher on Thursday, with Class A shares closing at $390.13, a 0.3% gain, following Google Cloud's announcement of new artificial intelligence partnerships with EQT and Workday. The uptick comes amid a broader tech rally that pushed the Nasdaq Composite to a record close.
Google Cloud's AI Push
Google Cloud has secured a deal with EQT, a Swedish private markets group, to supply its AI platform, Gemini models, cybersecurity tools, and engineering support to over 300 portfolio companies. Bert Janssens of EQT stated that the initiative aims to 'future-proof' businesses, ensuring they remain competitive in an AI-driven economy. Separately, Workday and Google Cloud expanded their collaboration, integrating Workday's Sana Self-Service Agent into Gemini Enterprise and making Gemini the default AI model for Workday's Sana agent. Gerrit Kazmaier of Workday highlighted customer demand for accessible HR and finance tools, while Google Cloud's Karthik Narain emphasized making AI agents more useful across enterprises.
Market Context and Earnings
Alphabet's market capitalization now stands near $4.73 trillion, reflecting investor focus on AI monetization beyond traditional search. The company's first-quarter results showed revenue of $109.9 billion, up 22% year-over-year, with Google Cloud contributing $20.0 billion, a 63% increase. Operating margin reached 36.1%, while capital expenditures surged to $35.7 billion from $17.2 billion a year ago, driven by data center and hardware investments.
Broader market gains were supported by the S&P 500 rising 0.58% and the Nasdaq climbing 0.91% to fresh highs, amid reports of a draft U.S.-Iran ceasefire extension. Microsoft jumped 3.5% on news of a new coding model planned for next week, and Snowflake soared 36% after raising its forecast and announcing a $6 billion AI infrastructure deal with Amazon Web Services.
Valuation and Risks
Alphabet's Class A shares trade at approximately 29.8 times earnings, a premium that leaves little room for error. Any shortfall in cloud revenue, search advertising, or unbridled AI spending could weigh on the stock. The company is also transitioning its core search product to incorporate AI, raising concerns about ad placement, publisher traffic, and user trust. Business Insider reported that CEO Sundar Pichai criticized an AI-powered search result for being 'more opinionated than it should be.'
Jitania Kandhari of Morgan Stanley Investment Management noted that markets remain resilient due to a strong global economy and corporate earnings, but pressure is mounting for AI leaders to show tangible results. Alphabet's heavy spending on AI infrastructure and new enterprise deals may eventually translate into sustained cloud sales, but the risk of disrupting its lucrative search business persists.
