Key Highlights
- Alphabet shares climbed 33.8% during April, marking the strongest monthly advance in two decades
- First-quarter revenue reached $109.9B, expanding 22%; Google Cloud delivered 63% growth to $20B
- Cloud commitments backlog expanded from $243B to $468B in a single quarter
- The company announced plans to sell TPU chips directly to enterprise clients, entering Nvidia’s territory
- Wall Street consensus shows 86% Buy ratings; J.P. Morgan maintains top pick status
Alphabet shares concluded April with a 33.8% gain, marking the company’s most impressive monthly advance since October 2004. The rally gained momentum from strengthening market conditions combined with exceptional first-quarter financial results announced on April 29.
Shares surged 10% in the trading session immediately following the earnings announcement on April 30.
First-quarter revenue reached $109.9 billion, representing 22% annual expansion. Google Services generated $89.6 billion in revenue, climbing 16%. Google Cloud emerged as the performance leader, delivering 63% growth to reach $20.0 billion.
Earnings per share landed at $5.11, substantially above the Street consensus of $2.63. A significant portion stemmed from $36.9 billion in unrealized private equity investment gains — largely from positions in Anthropic and SpaceX. Operating income, which provides a clearer picture of operational strength, expanded 30% to $39.7 billion.
Cloud Commitments Backlog Experiences Dramatic Expansion
CEO Sundar Pichai highlighted a metric that captured immediate analyst attention. Google Cloud’s commitments backlog expanded from $243 billion in the previous quarter to over $460 billion — representing a near doubling in three months.
J.P. Morgan analyst Doug Anmuth characterized it as “the single-most impressive metric this earnings season thus far.” Management expects more than half of these commitments to generate revenue within the next two years.
Cloud services account for 99% of the total backlog figure.
Search operations maintained robust momentum. This segment delivered 19% year-over-year revenue growth during Q1, extending the acceleration trend to four consecutive quarters.
Following the earnings release, more than 40 analysts elevated their price targets. Among 74 firms monitored by FactSet, 86% currently assign Buy ratings to GOOGL. J.P. Morgan confirmed its Overweight rating while raising its price objective to $460 from $395.
Alphabet Enters Direct Competition With Nvidia Through TPU Distribution
Pichai unveiled a strategic expansion during the earnings conference call. Alphabet plans to sell its Tensor Processing Units (TPUs) directly to a curated group of enterprise customers for deployment in their private data centers.
Previously, TPUs were exclusively available through rental arrangements on Google Cloud infrastructure. This strategic pivot positions Alphabet as a direct competitor to Nvidia in the data center artificial intelligence chip marketplace.
During April, Alphabet launched its eighth-generation TPU family — featuring the TPU 8t designed for AI model training and the TPU 8i optimized for AI inference workloads.
D.A. Davidson analyst Gil Luria observed that hardware transactions have already contributed substantially to the cloud commitments backlog. He acknowledged remaining uncertainties regarding the cost structure and contractual mechanics of these TPU arrangements.
Luria represented one of the few cautious voices following the earnings announcement, maintaining a Neutral rating while lifting his price target to $375 from $310. He suggested that the exceptional performance is “well reflected in the current valuation.”
Alphabet shares have appreciated 23% year to date and 135% over the trailing twelve months. The company’s market capitalization now approaches Nvidia’s valuation.
J.P. Morgan’s Anmuth stated: “GOOG/L remains our top overall pick, and we believe shares will continue to go higher on both earnings revisions & multiple expansion.”
As of Monday’s trading session, GOOGL was changing hands around $382.20.
