Alphabet first-quarter results likely to show continued growth, boosted by cloud

Alphabet is gearing up to unveil its first-quarter earnings report this Wednesday, and analysts are eager to see the results. According to insights from LSEG, the tech giant has been a standout performer, with its stock surging 118% over the past year, making it the leading contender among major tech companies. A significant contributor to this growth is Alphabet's Gemini artificial intelligence models and its expanding cloud infrastructure services. Analysts are forecasting an impressive 18.7% revenue increase, projecting figures to reach $90.2 billion, marking the highest quarterly growth rate for the company since 2022. In the initial three months of the year, Google has integrated its Gemini AI models into various products, enhancing offerings from Google Maps to new AI design tools. Furthermore, the company announced that users will be able to connect Google apps with the Gemini chatbot, allowing features such as generating personalized images from users' Google Photos. The cloud division is another area of significant growth for Alphabet, with expectations of a staggering 47% revenue increase, climbing from $12.26 billion in the same quarter the previous year. In response to the rising demand for AI solutions, Alphabet, along with other major players, is heavily investing in AI infrastructure. The company has indicated that its capital expenditures for 2026 could reach between $175 billion and $185 billion, a forecast that would more than double its spending for 2025. This earnings report will be the first update from Alphabet since the onset of the U.S.-Iran conflict in February, which has led to fluctuations in oil prices. Alongside Alphabet, competitors like Microsoft, Amazon, and Meta are also slated to release their quarterly results after the bell. At last week’s Google Cloud Next conference, Alphabet discussed advancements in its eighth-generation tensor processing unit (TPU), which is vital for competing with Nvidia in the AI chip market. The company is pivoting from producing multi-functional chips to developing specialized processors for distinct tasks. Investors will likely be keen on Alphabet's investment strategies, especially its commitment of up to $40 billion to Anthropic, which includes substantial TPU compute commitments. Additionally, Alphabet's self-driving subsidiary, Waymo, recently raised $16 billion in funding, elevating its valuation to $126 billion, and is preparing to launch its autonomous vehicle services in major cities including Dallas and Houston. In terms of portfolio adjustments, Google has divested some equity in its fiber optic broadband venture GFiber and reduced its stake in its health sciences division, Verily, after a $300 million investment round. As Alphabet prepares to share its financial performance, the anticipation builds for what could be another strong quarter driven by its AI and cloud initiatives.