Alphabet shares closed 10% higher at $381.94 on April 30 after the company released its Q1 2026 earnings, extending its gain for the month to 34%. That marked its strongest monthly performance since the company’s 2004 IPO. Revenue for the quarter came in at $109.9 billion, up 22% year over year and above Wall Street expectations of $106.8 billion. Adjusted earnings per share reached $5.11, nearly double the analyst estimate of $2.63, while net income rose 81% to $62.58 billion.
Google Cloud delivered the biggest upside
The main driver behind the market reaction was Google Cloud. The segment posted $20 billion in revenue for the quarter, up 63% from a year earlier and well above the analyst forecast of $18.4 billion. Operating margin improved sharply as well, rising from 18% in the same period last year to 34%. Backlog nearly doubled from the prior quarter, pointing to strong enterprise demand.
CEO Sundar Pichai said on the earnings call that the company was still facing short-term compute constraints, adding that cloud revenue could have been higher if capacity had been available. It was a brief comment, but it shaped the read-through: demand is there, infrastructure remains tight.
Higher capex guidance was accepted by the market
Alphabet also raised its 2026 capital expenditure guidance to $180 billion to $190 billion, up from the previous range of $175 billion to $185 billion. Investors did not push back. Instead, the stock rallied as the company showed that AI-related spending was already feeding into cloud growth and margin expansion. After the report, Scotiabank lifted its price target to $450, while Barclays set a target of $405.
The reaction stood in contrast to Meta. Meta also increased its capital expenditure outlook by $10 billion to $125 billion to $145 billion, yet its shares fell 8.5%. Based on the source material, the difference was straightforward: Google Cloud had already posted 63% revenue growth, giving investors visible evidence that AI spending was translating into sales, while Meta had not shown a revenue return on the same scale.