"Google still earns the majority of revenue from Search and YouTube, but the bull thesis has shifted to Google Cloud and Gemini. Q1 FY2026 revenue of $109.90B grew 21.79% YoY, and EPS of $5.11 beat the $2.63 estimate. The stock has gone vertical since."
"Google Cloud revenue surged 63% YoY to $20.03B, and the backlog nearly doubled quarter over quarter to over $460 billion. That is multi-year visibility most software companies can only dream of. Search accelerated to 19% growth, undercutting the thesis that AI assistants would gut the franchise. Gemini is now processing more than 16 billion tokens per minute via API, up 60% sequentially."
"Q1 capital expenditures hit $35.67B, up 107.44% YoY, and management guided full-year 2026 CapEx to $175B-$185B. Free cash flow collapsed 46.63% to $10.12B. Q1 net income was also flattered by $36.91 billion in unrealized equity gains, which is not recurring earnings power."
"Google Network ad revenue slid from $7.26B to $6.97B, regulatory overhang remains, and insider activity has been net selling across 156 transactions. At a 30 trailing P/E with FCF compressing, bears argue the easy money has been made."
Google shares trade near the 52-week high after a large one-year rally tied to AI. Revenue growth remains supported by Search and YouTube, while the bull case centers on Google Cloud and Gemini. Q1 FY2026 revenue reached $109.90B, up 21.79% year over year, with EPS of $5.11 beating estimates. Cloud revenue rose 63% to $20.03B, backlog neared $460B, Search growth accelerated to 19%, and Gemini API processing increased. Operating income rose 29.7% with margin expansion. The bear case cites CapEx rising to $35.67B in Q1, guidance of $175B–$185B for 2026, free cash flow down 46.63% to $10.12B, and nonrecurring gains affecting net income.
Read at 24/7 Wall St.
Unable to calculate read time
Collection
[
|
...
]