Alphabet reported revenue of $109.9 billion for the first quarter of 2026, representing a 22% increase from the prior-year period and the company’s 11th consecutive quarter of double-digit growth.
Revenue increased 19% on a constant-currency basis. Operating income rose 30% to $39.7 billion, while Alphabet’s operating margin expanded by approximately two percentage points to 36.1%.
Net income increased 81% to $62.6 billion from $34.5 billion a year earlier. Diluted earnings per share rose 82% to $5.11 from $2.81.
However, a substantial portion of the earnings increase came from investment gains rather than Alphabet’s core operations. Other income totaled $37.7 billion, primarily reflecting gains on equity securities.
Alphabet recorded a net gain of approximately $36.9 billion on equity investments during the quarter. The gain increased net income by an estimated $28.7 billion and diluted earnings per share by $2.35. Alphabet cautioned that changes in the value of its investments could create volatility in future results.
Google Services revenue increased 16% to $89.6 billion. The segment includes Google Search, YouTube, Android, Chrome, Google Maps, Google Play, consumer subscriptions and hardware products.
Google Search and other advertising revenue increased 19% to $60.4 billion from $50.7 billion. Alphabet said AI-powered Search experiences helped increase usage and pushed search queries to an all-time high.
YouTube advertising revenue rose 11% to $9.88 billion, while revenue from subscriptions, platforms and devices increased 19% to $12.38 billion.
Google Network revenue declined to $6.97 billion from $7.26 billion. Total Google advertising revenue increased to $77.25 billion from $66.89 billion.
Google Services operating income rose approximately 24% to $40.59 billion from $32.68 billion.
Google Cloud delivered the fastest growth among Alphabet’s major businesses. Cloud revenue increased 63% to $20.03 billion from $12.26 billion, driven by enterprise AI infrastructure, AI software solutions and core Google Cloud Platform services.
Google Cloud operating income more than tripled to $6.6 billion from $2.18 billion.
Cloud backlog nearly doubled from the previous quarter to more than $460 billion, indicating substantial contracted demand that has not yet been recognized as revenue.
Alphabet said Gemini Enterprise paid monthly active users increased 40% quarter-over-quarter. The company’s Gemini models are processing more than 16 billion tokens per minute through direct customer use of its application programming interfaces, up 60% from the previous quarter.
Alphabet also reported its strongest quarter to date for consumer AI subscription plans, led by the Gemini app.
The company’s total number of paid subscriptions reached 350 million, with YouTube and Google One identified as the largest contributors. Subscription revenue is becoming a larger part of Alphabet’s business as the company expands beyond advertising.
Operating expenses increased as Alphabet invested more heavily in AI research, technical infrastructure, sales and corporate operations.
Total costs and expenses rose approximately 18% to $70.2 billion from $59.63 billion. Cost of revenues increased to $41.27 billion from $36.36 billion, reflecting higher expenses associated with delivering cloud, advertising, subscription and AI services.
Research and development spending increased approximately 26% to $17.03 billion from $13.56 billion. The increase reflects Alphabet’s continued investment in Gemini models, AI infrastructure, Google Cloud products and other technical initiatives.
Sales and marketing expenses rose approximately 23% to $7.61 billion from $6.17 billion, while general and administrative expenses increased approximately 21% to $4.29 billion from $3.54 billion.
Alphabet-level operating losses also increased significantly, widening to $5.39 billion from $3.03 billion.
These expenses primarily include shared AI research and development, employee compensation and infrastructure costs related to general AI models. They also include central finance, human resources, legal and philanthropic expenses, along with certain fines, settlements, severance charges and office reductions.
Despite the higher expense base, revenue grew faster than total operating costs, allowing Alphabet to increase operating income and expand its operating margin.
Other Bets revenue declined to $411 million from $450 million, while the segment’s operating loss widened to $2.1 billion from $1.23 billion.
Other Bets includes Alphabet businesses that are not individually large enough to report as separate segments, including autonomous transportation and internet services.
Waymo exceeded 500,000 fully autonomous rides per week during the quarter, according to Alphabet CEO Sundar Pichai. The milestone indicates continued expansion of Alphabet’s commercial autonomous vehicle operations.
Operating cash flow increased to $45.79 billion from $36.15 billion. However, purchases of property and equipment more than doubled to $35.67 billion from $17.2 billion as Alphabet continued investing in data centers, servers and other infrastructure supporting AI and cloud demand.
Free cash flow totaled $10.12 billion, compared with trailing 12-month free cash flow of $64.43 billion. Alphabet defines free cash flow as operating cash flow minus capital expenditures.
Alphabet expects full-year 2026 capital expenditures to range from $195 billion to $205 billion. The spending is expected to primarily support technical infrastructure, including servers, data centers and other capacity needed to meet growing demand for Google Cloud and AI products.
The forecast signals that Alphabet plans to accelerate infrastructure spending substantially during the remainder of the year. The company is investing ahead of expected demand as customers increase their use of enterprise AI infrastructure, Gemini models and other compute-intensive services.
The higher capital expenditure outlook could place pressure on near-term free cash flow, even as Alphabet’s operating cash generation continues to grow. The company believes the investments are necessary to expand capacity and support longer-term growth across Search, Google Cloud and its broader AI product portfolio.
Alphabet spent $33.62 billion on acquisitions and intangible assets during the quarter, compared with $340 million a year earlier.
The company also issued senior unsecured debt that generated approximately $31.1 billion in net proceeds for general corporate purposes. Long-term debt increased to $77.5 billion at the end of March from $46.55 billion at the end of 2025.
Alphabet ended the quarter with approximately $126.84 billion in cash, cash equivalents and marketable securities, largely unchanged from the end of 2025.
The company’s workforce increased to 194,668 employees from 185,719 a year earlier.
Alphabet’s board increased the quarterly cash dividend by 5% to $0.22 per share from $0.21. The dividend is payable on June 15, 2026, to Class A, Class B and Class C shareholders of record as of June 8.
KEY QUOTE:
“2026 is off to a terrific start. Our AI investments and full stack approach are lighting up every part of the business.”
“Search had a strong quarter with AI experiences driving usage, queries at an all time high, and 19% revenue growth. Google Cloud revenues grew 63% with backlog nearly doubling quarter on quarter to over $460 billion.”
“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.”
“Our first-party models, like Gemini, are now processing more than 16 billion tokens per minute via direct API use by our customers, up 60% from last quarter.”
Sundar Pichai, CEO of Alphabet and Google
