Alphabet Q1 Earnings Release Looms, Can Enormous AI Investment Be Converted into Revenue?
Alphabet Q1 2026 Earnings Preview
Post-market release on April 29th, Eastern Time · GOOGL
📊 Market Consensus Estimates
Metric | Expected Value | YoY |
|---|---|---|
Total Revenue | $92.2 billion | +20.6% |
Adjusted EPS | $2.64 | -6.1% |
Google Cloud Revenue | $18.4 billion | +50.1% |
Total Advertising Revenue | $76.91 billion | +15% |
YouTube Advertising | $10.03 billion | +12.4% |
Capital Expenditure for the Quarter | $29.4 billion | +78% |
The core reason for the EPS YoY decline: Depreciation pressure from huge capital expenditures on AI infrastructure, not business deterioration.
🔍 Three Key Focus Points
1️⃣ Cloud Business: Can High Growth Be Synchronized with Profit Margin Improvement?
Clarify a Misconception — Google Cloud has been profitable since 2023, not "about to turn positive".
Profit Margin Trajectory of Cloud Business in 2025
Q1 17.8% →
Q4 30.1% (+12.6pct YoY)
The real issue this quarter is: Can the profit margin continue to rise while maintaining 50%+ high growth?
Supporting factors: Unit service cost of Gemini has decreased by 78% in 2025, economies of scale continue to be released, and the backlog of $240 billion in orders is gradually realized.
2️⃣ Capital Expenditure: Aggressive Investment, Where Is the Break-even Point?
Scale of Capital Expenditure
2025 annual ～$90 billion
2026 guidance $175–185 billion ← Almost doubled
Key Arithmetic: Capital expenditures are depreciated over a 5-year period, with an additional $10 billion in depreciation cost pressure annually. What investors need to confirm is only one thing —
Can the acceleration of revenue cover the additional depreciation?
3️⃣ AI Overviews: Hidden Pressure on Search Advertising
The double-sided impact of the "answer front" mode of "AI Overviews":