Alphabet Drives 63% Cloud Surge, Guides $180–190B CapEx and Invests $75M in A24
Alphabet’s Q1 cloud revenue surged 63% to over $20 billion, doubling its $462 billion backlog and prompting a $180–190 billion 2026 capex guide due to compute constraints. The company also agreed to invest $75 million in an AI research partnership with A24, while a DeepMind scientist’s exit spurred a 6% stock drop.
1. Cloud Growth and Backlog Expansion
Alphabet’s cloud division posted 63% revenue growth in Q1 2026, surpassing $20 billion for the first time. The enterprise AI solutions backlog nearly doubled in one quarter to $462 billion, marking cloud as a primary growth driver.
2. Compute Constraints and CapEx Guidance
Management acknowledged near-term compute limitations that restrained higher cloud revenue. To address capacity, Alphabet guided $180–190 billion in capital expenditures for 2026 and signaled a significant further increase in 2027.
3. AI Research Deal with A24
Alphabet’s DeepMind unit committed $75 million to a multi-project AI research partnership with independent film studio A24. The collaboration will integrate filmmakers’ feedback into advanced AI tools for storytelling and production workflows.
4. Stock Reaction to DeepMind Departure
Shares of Alphabet fell nearly 6% after a key DeepMind researcher departed for a rival AI firm. Investors cited the talent loss as a short-term pressure on the company’s AI leadership narrative.
