Alphabet Raises 2026 Capex to $190B, Sees AI-Driven 2027 Increase
Alphabet's Q1 revenue jumped 22% to $109.9 billion with Google Cloud revenue up 63% to $20.03 billion and YouTube watch hours surpassing 200 million daily in the U.S. The company raised its full-year 2026 capital expenditure forecast by $5 billion to $180–190 billion and expects a further increase in 2027.
1. Q1 Financial Performance
Alphabet delivered $109.9 billion in revenue for Q1, marking a 22% year-over-year gain driven by strength across search and other segments. Operating income expanded on efficiency gains, reflecting sustained growth momentum following the company’s early-year investments.
2. Google Cloud and AI Growth
Google Cloud posted revenue of $20.03 billion, up 63% year-over-year, fueled by enterprise AI adoption and a backlog of over $460 billion. Paid monthly active users for Gemini Enterprise rose 40% quarter-on-quarter, underscoring robust demand for AI compute services.
3. Capital Expenditure Outlook
The company updated its 2026 capex guidance to a range of $180–190 billion, a $5 billion increase at both ends of the spectrum, citing accelerated AI infrastructure needs and the recent Intersect acquisition. Management signaled a significant further capex ramp in 2027 to support expanding data center and AI compute capacity.
4. YouTube Engagement and Subscriptions
YouTube U.S. viewers now watch over 200 million hours of content daily, and over 10 million channels publish Shorts each day. Subscription services hit a new peak with 350 million paid subscribers across YouTube Premium and Google One, driven by expanded content and AI-powered recommendations.