Google Cloud, under Alphabet, reported a record first quarter with over $20 billion in revenues, marking a 63% rise from last year. However, investors expressed concerns about business constraints and cloud capacity allocation. In Q1 2026, cloud growth was fueled by the Google Cloud Platform’s strong performance, which outpaced the division’s overall growth. This division includes services like infrastructure, data analytics, AI/ML tools, and Google Workspace.
Alphabet CEO Sundar Pichai highlighted strong demand for Gemini Enterprise and AI solutions, noting increased demand for infrastructure such as TPU hardware and data centers. AI solutions drove growth with products based on Google’s genAI models growing by nearly 800% year-over-year. Google Gemini Enterprise grew 40% quarter-over-quarter, with API token growth reaching 16 billion per minute, up from 10 billion in Q4.
Pichai also noted cloud milestones, including new customer acquisition doubling year-over-year and an increase in $100 million to $1 billion deals. Customers exceeded initial commitments by 45% quarter-over-quarter. Despite this, Pichai cautioned about growth constraints, mentioning a doubled cloud backlog to $462 billion, positioning it as a positive differentiator.
“We are compute constrained in the near-term,” Pichai said, adding that cloud revenue would have been higher with more capacity. The company is working through this and investing for future opportunities. Techcrunch event: San Francisco, CA | October 13-15, 2026.
The company aims to address 50% of the backlog in the next 24 months. Revenue potential stems from cloud infrastructure offerings and, for some clients, direct TPU hardware sales. Pichai emphasized Google’s focus on return on capital investment (ROIC) for continued cutting-edge investment.
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