GOOGL is now among the strongest performers within mega-cap tech following a very strong Q1 2026 report. The company delivered approximately $110 billion in revenue (+22% YoY), while Google Cloud became the standout surprise with growth accelerating to around 63%.
The market was particularly impressed by the Cloud backlog, which expanded to over $460 billion. Analysts view this as a signal of sustained long-term AI demand from enterprise clients. Following the earnings release, more than 40 analysts raised their price targets, and J.P. Morgan once again named Alphabet its “top overall pick.”
A major shift — Google is starting to win the AI race
Back in 2024–2025, the market feared that ChatGPT and AI-driven search could disrupt Google Search. That narrative is now shifting rapidly. Alphabet claims that AI Overviews and Gemini are not cannibalizing search revenue but instead are increasing query volume and improving monetization.
According to Sundar Pichai, search queries have reached all-time highs, while Gemini has become the central pillar of the company’s AI ecosystem. Analysts are increasingly pointing to Google’s “full-stack AI advantage”: control over the entire stack — including Search, Cloud, TPU chips, Android, YouTube, and proprietary models.
However, markets are beginning to price in the risks of massive investment
The key concern now is the sharp rise in capital expenditures. Alphabet plans to invest $175–185 billion into AI infrastructure, data centers, and TPU clusters in 2026.
Some analysts believe the market is still underestimating the impact of these investments on margins. There is a growing view that Google is transitioning from a high-margin advertising business into a capital-intensive AI infrastructure company.
At the same time, the bullish argument is that these investments are exactly what will build a long-term moat against Microsoft/OpenAI and Amazon.
Antitrust pressure remains the primary long-term risk
Regulatory pressure is also intensifying. The DOJ continues its antitrust actions against Google’s search business, including efforts to limit exclusive agreements and require data sharing with competitors.
Regulatory scrutiny is already extending to AI products, including Gemini. For now, the market views these risks as manageable, but they remain the key long-term bearish factor for Alphabet.
Despite this, overall analyst sentiment remains positive. As previously noted in Google holds near psychological $400 level, the market increasingly sees Google not as a loser of the AI revolution, but as one of its primary beneficiaries.
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