Alphabet surges on AI-driven earnings beat as investors embrace rising spending

Alphabet delivered a standout quarterly performance, significantly beating Wall Street expectations and reinforcing investor confidence that its heavy investment in artificial intelligence is beginning to pay off.

Revenue for the quarter reached $109.9 billion, rising 22% year over year and coming in well ahead of forecasts.

Earnings per share jumped 82% to $5.11, nearly double analyst expectations, driven by strong performance across search, subscriptions and cloud services.

One of the strongest highlights was the company’s cloud division, which saw revenue rise sharply by 48%, while operating income in the segment more than tripled.

This performance helped offset weaker results in areas such as YouTube advertising and other smaller business units.

The results triggered a strong market reaction, with shares rising more than 6% in after-hours trading, adding to gains already seen earlier in the year.

Alphabet also signalled a major increase in future investment, raising its planned capital expenditure for 2026 to between $180 billion and $190 billion.

The company said rising demand for AI computing power is driving the need for expanded data centre and infrastructure spending.

Executives emphasised that demand for artificial intelligence resources is accelerating rapidly, with both internal teams and external customers requiring more computing capacity to support next-generation models and services.

Despite concerns on Wall Street about the scale of AI-related spending, investors appeared reassured by strong revenue growth, expanding margins and rising cloud demand, all of which suggest that Alphabet’s strategy is translating into measurable returns.

The results further reinforce Alphabet’s position as one of the major beneficiaries of the global AI investment cycle, even as capital requirements continue to climb.