CNBC's MacKenzie Sigalos reports on Alphabets blowout quarter, with every major business line including search and cloud reporting accelerating growth. It comes as Alphabet turns its massive AI infrastructure bets into revenue.

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Alphabet has reported its first quarter with revenue exceeding $100 billion, marking a significant milestone for the company. Growth was seen across all major business lines, with search revenue up 14%, YouTube ads up 15%, and Google Cloud increasing by 34% year over year, surpassing analyst expectations.

CEO Sundar Pichai attributed the strong results to Alphabet's comprehensive AI strategy, including new products like AI mode and the Gemini chatbot. The company also reported a surge in its cloud backlog and announced major contracts, while raising its full-year capital expenditure guidance to meet increasing AI demand.

Alphabet reports first $100B quarter

Hey Courtney. So it was Alphabet's first hundred billion dollar quarter and they were firing on all cylinders. We saw acceleration across every major business line as the company turns its massive infrastructure bets into real revenue search up 14 percent. YouTube ads rose 15 percent and then Google Cloud each of 34 percent year over year beating street expectations. CEO Sundar Pichai credited the beat to Alphabet's full stack AI strategy. New products like overviews and AI mode are driving meaningful query growth especially among younger users. AI mode now has 75 million daily actives in the U.S. with usage doubling over the quarter. Google is also testing ads inside AI mode though it's too early for results. And then Gemini that is Google's consumer facing chat bot that goes head to head with Chachi BT. It's now up to 650 million monthly active users closing that gap with open AI. Google is also battling it out with Microsoft and Amazon in the cloud wars. Its backlog which is really the best indicator of future revenue surge to one hundred and fifty five billion dollars that is up nearly 80 percent from a year ago. And then the number of billion dollar cloud deals this year already exceeds the past two years combined. And that doesn't even include its newly announced contract with Anthropic worth tens of billions of dollars and big wins with meta open AI and others continue to validate Google's custom silicon approach. That's part of why investors are rewarding Google for raising its full year capex guidance to as much as ninety three billion dollars because it's a clear sign that it is racing to meet surging A.I. demand and close the gap with Microsoft and Amazon and the CFO flagging an even bigger step up coming in 2026. Guys yeah on that point McKenzie I think it is worth noting that Microsoft Alphabet and Meta all indicated a lot more spending. I mean you just said it from from Alphabet CapEx now ninety one and ninety three billion and twenty five and a significant increase next year. Meta saying on their call and again this is why the stock in part is down as much as 12 percent that next year will be notably larger than 2025. And Microsoft is already at 140 billion a year run rate. I mean the numbers are staggering and there doesn't appear to be any let up. And what's fascinating here is it's a tale of two forms of R.O.I. on that hyperscaler investment. So whereas Meta and Microsoft are being punished part of why investors are getting on board with Alphabet upping its capex spend is because they're seeing ads being tested within its different Gemini products both in search potentially in the chat bot. And that's what they wanted to see. They're finally getting from CEO Sundar Pichai a monetization strategy or path to get there. His chief business officer Philip Schindler also saying that this is something that they're working on. And just look at their performance over Q3. That stock up 38 percent. It's a biggest gain in 20 years. And it's really reflective of the fact that you know you've got Pichai convincing investors that they have a way to make money on it. It certainly helps that search beat the streets expectations because the big concern was that A.I. would cannibalize its its revenue engine which remains a search business. Yeah. A year ago that's what we were talking a lot about of course. And in fact it's proved otherwise. Stock up 52 percent year to date now approaching a 3.5 trillion dollar market value. Mackenzie thank you.

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Alphabet reports first $100B quarter

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