Alphabet posts record $112.1 billion profit as cloud and AI drive surge
The tech giant’s latest earnings report highlights strong enterprise adoption of artificial intelligence solutions, though shares have dipped 9 per cent since late April despite the robust financial results.
Alphabet has reported record quarterly profits of $112.1 billion, a significant increase from $28.1 billion in the same period last year. The results were driven largely by a 24 per cent year-on-year rise in total revenue to $119.8 billion. A primary contributor to this growth was Google Cloud, which saw revenue surge 82 per cent to $24.8 billion, significantly outperforming analyst expectations of $22.46 billion. This expansion is largely attributed to strong enterprise adoption of artificial intelligence solutions and infrastructure.
The company’s cloud contracting backlog, representing work not yet converted to revenue, has climbed to $514 billion. This marks the 12th consecutive quarter of double-digit revenue growth for Google, with Google Services revenue also rising 15 per cent to $94.5 billion. CEO Sundar Pichai stated that AI investments are redefining business capabilities and noted strong momentum across the board.
Adoption of Google’s AI chatbot, Gemini, has accelerated, reaching 950 million monthly active users, up from 750 million in the fourth quarter of 2025. Despite the positive financial results, Alphabet shares have declined approximately 9 per cent since late April, though they remain nearly 13 per cent higher for the year. The period has also seen high-profile departures, including Gemini co-lead Noam Shazeer and Nobel laureate John Jumper.
Alphabet’s spending remains substantial, with annual capital expenditure estimates between $180 billion and $190 billion for data centres, chips, and infrastructure. Several analysts pressed Pichai during the earnings call on when these investments would yield returns. Pichai indicated that compute capacity investments are expected to pay off in 2027, citing strong demand indicators and long-term deals.
Pichai expressed confidence in the company’s trajectory, noting that the dynamics look healthier than they did a year ago. He attributed this confidence to the robust demand for AI infrastructure, which continues to justify the massive capital outlays required to maintain the company’s competitive position in the cloud market.
