Key Highlights
- Alphabet shares climbed 33.8% in April, marking the strongest month since October 2004
- First quarter revenue increased 22% year-over-year, reaching $109.9B
- Google Cloud revenue exploded 63% to $20B with backlog surging to $468B
- Company announces plans to sell TPU chips directly, entering Nvidia’s territory
- Wall Street analysts overwhelmingly bullish: 86% assign Buy ratings
Alphabet shares concluded April with a remarkable 33.8% gain, representing the company’s most impressive monthly showing in nearly twenty years. The extraordinary rally stemmed from a powerful combination of favorable market conditions and exceptional first-quarter financial results unveiled on April 29.
The stock surged 10% in a single trading session on April 30, immediately following the earnings announcement.
First-quarter revenue reached $109.9 billion, reflecting a 22% year-over-year increase. The Google Services division generated $89.6 billion, up 16%. However, Google Cloud emerged as the clear winner, delivering explosive 63% growth to reach $20.0 billion.
Earnings per share registered at $5.11, significantly surpassing Wall Street’s consensus forecast of $2.63. Much of this beat stemmed from $36.9 billion in unrealized investment gains — predominantly from positions in Anthropic and SpaceX. Operating income, which provides a more reliable performance indicator, increased 30% to $39.7 billion.
Cloud Commitments Surge to Record Levels
CEO Sundar Pichai highlighted a figure that captured the attention of Wall Street analysts. Google Cloud’s remaining performance obligations nearly doubled from the previous quarter, jumping to over $460 billion from $243 billion.
J.P. Morgan’s Doug Anmuth characterized it as “the single-most impressive metric this earnings season thus far.” Management expects more than half of these commitments to convert into recognized revenue within a two-year timeframe.
Cloud contracts account for 99% of the total backlog figure.
The Search business also demonstrated continued strength. This segment posted 19% year-over-year growth during Q1, extending the acceleration streak to four consecutive quarters.
In the report’s aftermath, more than 40 analysts upgraded their price targets. Among 74 firms monitored by FactSet, 86% currently maintain Buy ratings on GOOGL shares. J.P. Morgan maintained its Overweight stance while increasing its price target to $460 from $395.
New TPU Strategy Challenges Nvidia’s Dominance
Pichai unveiled an additional revenue opportunity during the quarterly conference call. The company plans to sell its proprietary Tensor Processing Units directly to a limited group of enterprise customers for deployment in their private data centers.
Previously, TPUs were exclusively accessible through rental arrangements on Google Cloud infrastructure. This strategic shift positions Alphabet as a more formidable competitor to Nvidia in the lucrative data center AI accelerator market.
During April, Alphabet launched its eighth-generation TPU lineup — featuring the TPU 8t designed for AI model training and the TPU 8i optimized for inference workloads.
D.A. Davidson’s Gil Luria observed that hardware sales have already contributed substantially to the expanding cloud backlog. However, he acknowledged lingering uncertainties regarding pricing structures and deal mechanics for these TPU arrangements.
Luria represented a minority voice following the earnings release, maintaining a Neutral rating while adjusting his target upward to $375 from $310. He suggested the strong performance is “well reflected in the current valuation.”
Alphabet shares have appreciated 23% year-to-date and an impressive 135% over the trailing twelve months. The company’s market capitalization now rivals that of Nvidia.
J.P. Morgan’s Anmuth stated: “GOOG/L remains our top overall pick, and we believe shares will continue to go higher on both earnings revisions & multiple expansion.”
As of Monday’s trading session, GOOGL changed hands near $382.20.
