Key Highlights
- Alphabet shares climbed 33.8% during April, marking the best monthly gain in two decades
- First-quarter revenue increased 22% year-over-year to $109.9 billion with Google Cloud jumping 63% to $20 billion
- Google Cloud’s remaining performance obligations nearly doubled to $468 billion from the previous quarter
- Company announced plans to sell TPU chips directly to customers, entering competition with Nvidia
- Analyst sentiment remains overwhelmingly positive with 86% Buy ratings; J.P. Morgan maintains top pick status
Alphabet shares finished April with a remarkable 33.8% gain, representing the company’s most impressive monthly advance since October 2004. The rally stemmed from a combination of favorable market conditions and exceptional first-quarter financial results unveiled on April 29.
The day after earnings were released, April 30, shares surged 10% during regular trading hours.
First-quarter revenue reached $109.9 billion, representing 22% year-over-year expansion. The Google Services division generated $89.6 billion in revenue, up 16%. Google Cloud emerged as the performance leader, delivering 63% growth to reach $20.0 billion.
Earnings per share totaled $5.11, significantly exceeding the Wall Street consensus of $2.63. A substantial portion stemmed from $36.9 billion in unrealized investment gains—primarily from positions in Anthropic and SpaceX. Operating income, which provides a more accurate view of core operations, expanded 30% to $39.7 billion.
Google Cloud Backlog Shows Dramatic Expansion
CEO Sundar Pichai highlighted a metric that captured immediate attention from Wall Street analysts. Google Cloud’s remaining performance obligations nearly doubled sequentially to exceed $460 billion—up from $243 billion in the fourth quarter.
J.P. Morgan’s Doug Anmuth described this as “the single-most impressive metric this earnings season thus far.” The company anticipates more than half of this backlog will translate into revenue over the next two years.
Cloud contracts account for 99% of the total backlog figure.
The Search business also demonstrated resilience. Revenue from search advertising expanded 19% year-over-year in the first quarter, marking the fourth consecutive quarter of growth acceleration.
In the aftermath of the earnings release, more than 40 Wall Street firms increased their price targets. Among 74 analysts monitored by FactSet, 86% currently assign Buy-equivalent ratings to GOOGL. J.P. Morgan maintained its Overweight stance while boosting its price target to $460 from $395.
Google Challenges Nvidia with Direct TPU Chip Sales
Pichai unveiled a strategic shift during the earnings conference call. The company will start offering its proprietary Tensor Processing Units for direct purchase to a curated customer base for deployment in their private data centers.
Previously, TPU access was exclusively available through Google Cloud’s rental model. This strategic pivot positions Alphabet in more direct rivalry with Nvidia across the data center artificial intelligence chip landscape.
During April, Alphabet launched its eighth-generation TPU family—featuring the TPU 8t designed for AI model training and the TPU 8i optimized for AI inference workloads.
D.A. Davidson’s Gil Luria observed that hardware revenue has already contributed substantially to cloud backlog growth. However, he raised questions regarding the economics and operational details of these TPU transactions.
Luria represented a minority skeptical voice following the earnings announcement, maintaining a Neutral rating while lifting his target to $375 from $310. He suggested the strong operational results are “well reflected in the current valuation.”
Alphabet shares have appreciated 23% year-to-date and 135% over the trailing 12-month period. The company’s market capitalization now approaches 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 close, GOOGL was changing hands near $382.20.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
