Google shares are rallying after hours as parent Alphabet’s first-quarter earnings report showed strong revenue growth in cloud computing and internet search ads, helping investors look past slowing profits amid huge AI spend.

• Earnings per share were $5.11, well ahead of Wall Street’s consensus estimate of $2.63, and up from $2.81 last year.

• Revenue for the quarter reached $110 billion, more than expectations of $107 billion, and up 22% on the year.

The most closely watched line in Google’s reporting is its cloud unit which will spend up to $185 billion on AI data centers this year to support its customers that rent AI servers over the internet. Quarterly cloud sales hit $20 billion, up 63% with a 33% operating profit margin.

Despite mounting depreciation expenses, Google Cloud’s margin is rising quickly.

In Q1, Google’s cloud computing backlog boomed to $460 billion from $240 billion in the December quarter.

The backlog is converted into realized revenue as new data centers come online and crunch artificial intelligence-related workloads – training AI models and processing AI apps.

Perhaps most notably, CapEx came in slightly below expectations ($35.674BN vs $35.97BN exp), but expectations continue to rise…

But, for now, the market is ignoring that with GOOGL up around 4% after-hours…

Google Search queries hit an “all time high” in the first quarter of 2026, according to a statement from CEO Sundar Pichai.

Also, Google’s Q3 internet search-advertising revenue came in at $60.40 billion, topping estimates of $59 billion.

However, Google dis not disclose how many monthly users its Gemini chatbot app had at the end of Q1. The Gemini app had 750 million monthly users at the end of Q4.

“This was our strongest quarter ever for our consumer AI plans, driven by the Gemini App. Overall the number of paid subscriptions has now reached 350 million, with YouTube and Google One being the key drivers,” Pichai said.

“Gemini Enterprise has great momentum with 40% quarter on quarter growth in paid monthly active users. And, finally, I’m pleased to see Waymo surpass 500,000 fully autonomous rides a week,” Pichai added.