Alphabet reports Q1 operating margin at a five-year high despite $35.7 billion in capex as revenue jumps 22%
Alphabet’s first-quarter operating margin climbed to 36.1%, its highest in five years, as revenue rose 22% to $80.5 billion and operating income jumped 30%. Google Cloud revenue surged 63% to over $20 billion, while Search revenue increased 19%, offsetting rising infrastructure costs.
Capital expenditures hit $35.7 billion last quarter, with Wall Street expecting nearly $44 billion in Wednesday’s report. Full-year capex may reach $190 billion, up from prior guidance, as Alphabet accelerates AI investments. Depreciation costs, spread over six years, will weigh on future profits.
Despite the spending surge, Alphabet’s profit engine remains robust, with Cloud operating income tripling. The company warned 2027 capex will be “significantly” higher, signaling sustained investment pressure.