Alphabet reported Q1 results that exceeded expectations, with revenue rising 22% to $109.9bn, surpassing the $107.2bn anticipated by analysts. This performance was cheered by the market, with shares climbing about 4% in after-hours trading. Momentum is largely being driven by the cloud business, which is benefiting from the rapid expansion of AI-related requirements.

Google Cloud recorded particularly strong growth, with revenue up 63% to $20bn, significantly beating estimates. The backlog nearly doubled Q-o-Q, exceeding $460bn, illustrating the strength of demand. Alphabet, the world's third-largest cloud provider, is ramping up strategic partnerships, notably with Meta and Palo Alto Networks, to bolster its AI infrastructure capabilities.

Amidst a period of rapid sector expansion, demand for AI-related cloud services continues to outstrip supply, prompting major corporations to intensify their capital expenditures. Alphabet is also strengthening its positioning with its Gemini models and new features integrated across its product suite, including advertising. Despite capacity constraints, the group is seeing the initial positive impact of AI on its legacy businesses, supporting its one-year stock performance.