By Katherine Blunt

Google parent company Alphabet reported a 22% surge in first-quarter revenue as the artificial intelligence race fuels growth of its cloud business.

Alphabet's sales reached about $110 billion, exceeding analyst expectations. Net income was $62.6 billion, an 81% increase compared with the same period a year earlier.

The company reported a record $403 billion in sales in 2025. Profits reached about $132 billion last year.

Like other tech giants, Alphabet is spending heavily to advance its AI models and build data centers needed to train and run them. Earlier this year, Alphabet lifted estimates for capital expenditures in 2026 to $175 billion to $185 billion, up from $91 billion to $93 billion in 2025.

Google's cloud division, which sells access to AI platforms and computing power, has grown significantly as the company works to expand its customer base. The cloud unit had $20 billion in first-quarter revenue, a 63% increase from the same period in 2025.

AI is 'lighting up every part of the business," said Chief Executive Sundar Pichai.

The company last week upped the ante in the battle to develop fast and efficient AI chips by unveiling the eighth generation of its Tensor Processing Units, or TPUs. It introduced a chip customized for inference, the type of computing needed to respond to user queries, and a separate chip customized for training AI models.

Google last year pulled ahead in the AI race with the November launch of Gemini 3, the most powerful version of its AI model and chatbot. It outperformed competing models on benchmark tests, scoring a range of intelligence categories.

OpenAI's ChatGPT remains the most popular chatbot with more than 900 million weekly users. But The Wall Street Journal reported this week that the company last year missed its annual revenue target, in part because Gemini ate into ChatGPT's market share.

Shares in Alphabet rose 65% last year and are up about 10% this year. The company earlier this year joined Nvidia in reaching a $4 trillion valuation.

In addition to developing Gemini, Google has been working to revamp its classic search engine with AI capabilities. The company last year rolled out "AI Mode," which searches and responds in a chatbot-like exchange with fewer links. And many traditional searches now produce an "AI Overview" that summarizes results at the top of the page.

The company reported about $60.4 billion in quarterly search revenue, up about 19% from the same quarter last year.

Google last year avoided harsh antitrust penalties in a federal lawsuit targeting its search monopoly. U.S. District Judge Amit Mehta ruled that the company can't pay to be the exclusive search engine on devices and browsers but rejected more damaging penalties sought by the government.

The Justice Department, which brought the case against Google in 2020, had proposed forcing the sale of its Chrome browser, among other things. The judge said such measures weren't necessary in part because the AI race had already made the search market more competitive.

News Corp, owner of The Wall Street Journal, has a commercial agreement to supply content on Google platforms.

Write to Katherine Blunt at katherine.blunt@wsj.com

(END) Dow Jones Newswires

April 29, 2026 16:28 ET (20:28 GMT)

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