Why Google chose AI over crypto and what it led to

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Why Google chose AI over crypto

Cloud drove the quarter

Alphabet, Google’s parent company, reported first-quarter 2026 revenue of $109.9 billion, beating forecasts of $107 billion. Net income jumped 81% year over year to $62.6 billion. Following the report, GOOGL shares rose more than 6–7% in after-hours trading and continued to climb.

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The main driver was Google Cloud, where most of the company’s AI products are concentrated. Revenue in the segment surged 63% to about $20 billion. Management openly admitted that enterprise AI solutions became the primary source of demand for the first time. The backlog nearly doubled to over $460 billion — future revenue already locked in through contracts.

Demand is so strong that Google can’t fully keep up. According to Alphabet CEO Sundar Pichai, the company is “compute constrained,” meaning it could generate even more revenue if it had enough data centers and chips, CNBC reports.

Just a few months ago, the market reacted negatively to Alphabet’s spending: shares fell more than 7%. At the time, the company planned to invest $175–185 billion in infrastructure, including servers, data centers, and proprietary chips. Now the range has been raised to $180–190 billion, but the reaction has changed: cloud is growing, AI is generating revenue, and investors see that spending is turning into results.

From crypto to AI

Back in the early 2020s, Google’s focus was tied to a very different area. The company experimented with blockchain via Google Cloud, ran nodes for various networks, and partnered with crypto projects like Coinbase and Chainlink.

At the same time, Google remained cautious about cryptocurrencies as a payment tool. It didn’t launch its own token, didn’t integrate crypto directly into its consumer products, and didn’t build a dedicated ecosystem around it. Even as it expanded ties with Web3 companies, this remained a service business — cloud, data, infrastructure, and developer tools.

But by early 2026, the company had largely shifted away from crypto. In March, Google Quantum AI warned that future quantum computers could break the cryptography used by most blockchains. According to its estimates, such attacks would require far fewer resources than previously thought — less than 500,000 physical qubits and only minutes of computation.

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Google effectively outlined its position: the crypto industry will need to overhaul its security, move to post-quantum cryptography, and address vulnerable wallets. This doesn’t look like a market the company is willing to bet on long term. Against this backdrop, AI looked far more practical. Unlike crypto, it integrates directly into existing products — search, advertising, cloud, email, and browsers.

Competitors are not standing still

Alphabet is not alone in the AI race. Meta, Amazon, and Microsoft also reported their results. All are investing heavily in AI and building infrastructure, but the market reaction shows that investors are starting to distinguish between real results and promises, Bloomberg reports.

Meta, for example, raised its capital expenditure forecast to $145 billion, but its shares dropped more than 6% after the report. The key issue is the lack of clear returns: the company doesn’t have a cloud business, and its AI products have yet to show comparable engagement or monetization. Even management admits it lacks a precise roadmap.

Amazon and Microsoft look more stable, but without a breakout. AWS grew 28%, in line with expectations. Investors reacted cautiously: solid performance, but no major upside surprise. Against this backdrop, Google stood out — not only increasing spending but also delivering tangible results.

Why it worked

AI is already strengthening Google’s core products. In search, AI-generated answers are increasing usage, while in advertising, algorithms are improving targeting and campaign efficiency.

In cloud, the shift is even clearer: companies are no longer buying just servers — they’re buying full AI solutions, including model training, data processing, and infrastructure. That’s why enterprise demand is driving growth.

Google also controls the entire stack. It has its own TPU chips, data centers, Gemini models, and cloud platform. Now it’s starting to sell those chips to third parties, entering a market previously dominated by Nvidia.

This is what sets AI apart from crypto in Google’s story. Crypto remained an external market — with regulatory risks, uncertainty, and infrastructure experiments. AI, on the other hand, became a technology Google can embed across nearly all of its products. That’s why the market isn’t reacting to hype, but to a clear business model.

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