Alphabet is investing up to $190 billion in AI and cloud infrastructure through 2026, and the company says spending will rise "significantly" again in 2027.
Alphabet posted record revenue of $109.9 billion in the first quarter of 2026, up 22 percent overall. Google Cloud cleared $20 billion in quarterly revenue for the first time, up 63 percent year-over-year. Revenue could have been higher: CEO Sundar Pichai said the business is constrained in the near term by a shortage of compute. The cloud backlog has grown to $462 billion.
Google suggests AI is the main driver behind that cloud growth, pointing to a sharp increase in token usage. That's a reasonable proxy for overall AI activity, but it's a weak signal for actual usefulness, which is what will really matter going forward.
To meet the demand, Google is also rethinking how it sells its TPUs, the company's in-house AI chips. Until now they've only been available through Google Cloud, but the company will start shipping them directly to select customers' data centers.
Alphabet's Q1 highlights: Search grew 19 percent, Cloud 63 percent, AI models now handle more than 16 billion tokens per minute, paid subscriptions hit 350 million, and Waymo is doing over 500,000 autonomous rides per week. | Image: Alphabet
