Google reported Q1 ‘26 earnings after the bell yesterday and the stock shot up on the results. The stock rose +10% post earnings after the news on amazing Google Cloud growth and ridiculous backlog of customer commitments to the tune of ~$460 billion. Here are some more highlights from the quarter.
Now, did GOOG 0.00%↑ report zero AI capex spend or something drastically different than other mega cap tech names? Not at all. But the difference is how they have locked in massive future revenues through customer commitments, have a high-growth cloud business to absorb AI capex, and the ability to deliver actual revenue from that capex through advertising and selling that compute to customers.
Let’s first look at their earnings results from this past quarter. I have shared quick earnings results on my social platforms (definitely follow my social accounts to get the latest information very quickly), but here they are once more so we can have them as a reference.
For this analysis, I used an un-levered beta of 1.55 (software internet industry) which was re-levered to 1.37 using the Hamada equation. In addition, I also used an ERP of 4.5% (for US equities), an effective tax rate of 17.61%, and a risk free rate of 3.76%.
Please refer to Stock Analysis for all the data I used in this analysis.
