Alphabet Inc. is set to release its first-quarter financial results after the U.S. market closes on Wednesday, with an earnings call scheduled for 4:30 p.m. Eastern Time. The report arrives as the Google parent's shares trade near all-time highs, with GOOG at $351.86 and GOOGL at $354.05, reflecting intense investor focus on the company's massive artificial intelligence investments.
Wall Street anticipates revenue of approximately $107 billion, representing a 19% year-over-year increase. However, earnings per share are expected to decline to $2.63 from the prior-year period, primarily due to a significant non-cash gain from venture investments recorded in the first quarter of 2025. This earnings season is particularly critical as it coincides with a busy period for major cloud players—Microsoft, Amazon, Meta Platforms, and Alphabet—all set to brief investors on AI infrastructure demand.
The 5 Billion AI Question
The central issue for investors is capital expenditure. In February, Alphabet guided for 2026 capital expenditures in the range of $175 billion to $185 billion, targeting long-term assets such as servers and data centers. The company indicated that spending would accelerate as the year progresses. This aggressive investment strategy is driven by Google's Gemini AI ambitions and a rapidly expanding cloud business.
During its recent cloud conference, Alphabet emphasized AI agents—digital assistants capable of planning and executing tasks—as a core component of its enterprise offerings. Google Cloud chief Thomas Kurian stated, “the experimental phase is behind us,” signaling a shift toward commercializing AI technologies. The company reported that Gemini now has over 750 million monthly active users, while Google Cloud's backlog more than doubled year over year to $240 billion by the end of the fourth quarter.
Cloud Growth Outpacing Rivals
Google Cloud revenue is projected to jump 50.1% for the March quarter, according to Reuters, outpacing the 40% growth forecast for Microsoft Azure and 25% for Amazon Web Services. This makes the cloud segment a critical gauge of how effectively AI spending is translating into actual sales. However, margins remain a key uncertainty. Estimates for Google Cloud's operating margin in the quarter range from 11.6% to as high as 34%, according to S&P Global's Melissa Otto, underscoring the unclear cost structure of running AI at scale.
Analyst Sentiment and Market Expectations
Analyst sentiment ahead of the report is generally positive but lacks a clear consensus. Needham's Laura Martin maintains a Buy rating with a $400 price target, while BMO Capital's Brian Pitz is more aggressive with an Outperform rating and a $410 target. Conversely, Rosenblatt's Barton Crockett remains cautious with a Neutral rating and a $357 target. YR Research, writing for Seeking Alpha, described the first quarter as an “inflection” point, suggesting the market may not be fully pricing in Alphabet's AI potential despite the stock's strong run.
Key Metrics to Watch
Beyond revenue and earnings, investors will scrutinize Alphabet's adherence to its February capital expenditure guidance, the impact of depreciation and power costs on margins, and whether Gemini is generating incremental revenue for Search and Cloud or merely supporting existing business lines. S&P Global notes that consensus estimates place Alphabet's 2026 capex at $179.3 billion—over five times higher than its 2023 spending. A revenue beat alone may not satisfy the market; the debate centers on whether these massive investments will yield sustainable returns.
