Alphabet reported a monster quarter, with sales exceeding expectations by more than $2.5 billion and earnings nearly double street estimates. According to LSEG data, first-quarter sales rose 22% year over year to $109.9 billion, significantly exceeding expectations of $107.2 billion. Earnings per share rose 82% to $5.11, well above the LSEG consensus estimate of $2.63. GOOGL YTD Mountain Alphabet YTD Google Parent company stock soared more than 6.5% on paper in after-hours trading. As of Wednesday’s close near its all-time high of about $350, the stock had already risen nearly 12% year-to-date. Club names Meta Platforms, Amazon and Microsoft also reported earnings after the close. Bottom line: Alphabet performed well in search, subscriptions, and cloud (the company’s three most important segments). This more than made up for the small misses in YouTube ads, networks, and other bets. That explains the topline beat. One thing to note is that cloud revenue increased by 48%, which resulted in cloud operating income increasing by over 200%. In terms of impressive EPS, the team managed costs and delivered significant year-over-year profit growth. TheStreet had expected the key earnings metric to contract slightly. Along with other clear indicators that investments in artificial intelligence are paying off (more on this later), these results are helping investors endure the huge spending on AI infrastructure, even as the research team tells investors to expect even higher levels in the year ahead. In terms of capital expenditures, Alphabet currently includes investments related to its acquisition of Intersect, a data center and energy infrastructure solutions provider, which was completed in March. As a result, Alphabet now expects full-year 2026 capital spending to be between $180 billion and $190 billion, up $5 billion at the midpoint and well ahead of the Street’s forecast of just over $175 billion. “We are experiencing unprecedented internal and external demand for AI computing resources,” CFO Anat Ashkenazi said in a post-earnings conference call. “The investments we are making in AI are delivering strong growth, as evidenced by Google Cloud’s record revenue and backlog growth, and the strong performance of Google services. Looking forward, these strong results reinforce our belief that we will invest the capital necessary to continue to capture AI opportunities. As a result, our 2027 capex is on track to 2026 “This is a great example of how while Wall Street is nervous about spending, investors are willing to give management a pass as long as they can consistently prove that their investments are paying off.” That’s exactly what we’re seeing in Alphabet’s performance, so we’re raising our price target from $350 to $400. I would also like to reiterate my rating of “1 equivalent to purchase”. We believe Alphabet should be a staple in any portfolio, but we may recommend patience on Thursday if the after-hours rally continues. The club is very likely to choose to lock in profits around Thursday’s opening, given the size of the position and the purchase history since resuming the position on 29 December 2025. The stock is up about 30% from the Iran war low in March. Why We Own It Alphabet has got its mojo back. The latest Gemini artificial intelligence model surprised investors while also drawing attention to Google’s custom chip co-designed with Broadcom. Google was also chosen as Apple’s AI partner. Add all this together, and with search still dominating and cloud growth off the charts, Alphabet would be a great addition to any portfolio. Competitors: Amazon, Microsoft, and Meta Platform Portfolio weight: 3.27% Latest purchase: April 6, 2026 Started: December 29, 2025 Comments AI experience helped drive search usage and queries to an all-time high. Google Cloud’s growth accelerated to 63% year-over-year, exceeding the 48% growth rate in the fourth quarter of last year. Even better, Google Cloud’s backlog nearly doubled from last quarter, ending the quarter at $460 billion. Adoption of the Gemini app led to a record quarter for Alphabet’s consumer AI products. Gemini Enterprise saw a 40% increase in paid monthly active users quarter over quarter. The number of transactions between $100 million and $1 billion also doubled compared to the same period last year. Companywide paid subscriptions ended the quarter at 350 million, driven primarily by YouTube and Google One. First-party LLMs like Gemini have seen a 60% increase in token usage per minute to 16 billion. In AI terminology, a token is a unit of data. Alphabet’s latest generation tensor processing unit (TPU) was co-designed with fellow club name Broadcom and delivers 80% better performance compared to the previous generation. Waymo, Alphabet’s self-driving car initiative, currently performs more than 500,000 fully self-driving trips per week. Six new cities have been launched since the beginning of this year, and Waymo now operates in 11 major cities across the U.S. (Jim Cramer’s Charitable Trust has long been a GOOGL. See here for a complete list of stocks.) 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