revenue $109.9B, net income $62.6B. Alphabet completes in acquisitions, doubles capex, suspends buybacks

Alphabet now reports centralized AI research and development as a separate Alphabet-level activity, distinct from segment-level R&D. This organizational change reflects increased investment in frontier AI models that serve multiple business units. The baseline filing did not disclose this centralized AI R&D structure.

The $32 billion Wiz acquisition announced in March 2025 closed in March 2026 for $29.5 billion after adjustments. This is Alphabet's largest acquisition to date and materially expands Google Cloud's cybersecurity capabilities. The baseline filing disclosed only the pending agreement.

Alphabet completed a $5.9 billion acquisition of Intersect in March 2026, a transaction not disclosed in the baseline filing. The financial results are allocated across segments, suggesting a cross-platform technology or capability rather than a single-segment asset.

Google Cloud has entered into agreements to supply multiple gigawatts of TPU hardware to customers for on-premises deployment, representing a new revenue stream. Revenue recognition begins later in 2026 with the majority in 2027, indicating material deferred revenue in backlog.

Alphabet committed to a $40 billion investment in an undisclosed private company, with $10 billion upfront and $30 billion contingent on milestones through 2030. This is one of the largest private-market commitments by a tech company and is accounted for as an equity derivative.

Alphabet is divesting majority control of GFiber (Google Fiber) in exchange for $1.5B cash, a $2B note, and a 49.99% equity stake. The transaction converts GFiber from a consolidated subsidiary to an equity-method investment, reducing Other Bets operating losses while retaining significant economic interest.

Waymo raised $16 billion in February 2026, with Alphabet providing the majority of the capital. This represents continued heavy investment in autonomous vehicle technology and suggests Waymo remains a consolidated subsidiary requiring substantial cash infusions.

Alphabet issued $31.1 billion in senior unsecured notes in Q1 2026, a material increase in leverage. The proceeds are designated for general corporate purposes, likely funding the Wiz and Intersect acquisitions, Waymo investment, and private company commitment disclosed in the same quarter.

Alphabet has committed to backstop up to $70.7 billion in data center and energy infrastructure financing ($9B + $28.4B existing, plus $33.3B future), with $15.3B already committed in April 2026. These credit backstops support third-party infrastructure buildout for AI workloads, representing significant off-balance-sheet contingent liabilities.

Revenue growth accelerated from 12% YoY in Q1 2025 to 22% YoY in Q1 2026. Google Cloud growth nearly doubled from 28% to 63%, while Google Services growth increased from 10% to 16%. The acceleration reflects both organic growth and the inclusion of Wiz and Intersect acquisitions.

Quarterly capital expenditures more than doubled from $17.2B in Q1 2025 to $35.7B in Q1 2026, reflecting aggressive investment in AI infrastructure including servers, network equipment, and data centers.

Operating margin expanded from 34% in Q1 2025 to 36% in Q1 2026, a 200 basis point improvement. This occurred despite a 24% increase in operating expenses, indicating strong revenue leverage and improved cost efficiency across the business.

Other income increased from $11.2B in Q1 2025 to $37.7B in Q1 2026, driven by $36.9B in net unrealized gains on non-marketable equity securities. This suggests significant mark-to-market appreciation in Alphabet's private company portfolio, likely including the $40B investment commitment disclosed in the same quarter.

Headcount increased by 8,949 employees (4.8% growth) from Q1 2025 to Q1 2026. This includes employees from the Wiz and Intersect acquisitions and reflects continued hiring despite industry-wide tech layoffs in prior periods.

Uncommenced data center lease commitments increased from $17.3B to $75.6B, a 337% increase. This reflects aggressive pre-commitment to data center capacity for AI infrastructure buildout, with lease terms extending up to 25 years.

Total purchase commitments increased from $62.1B to $332.4B, a 435% increase. This primarily reflects long-term supply agreements for technical infrastructure (servers, network equipment) and energy take-or-pay contracts to support AI infrastructure buildout.

Alphabet repurchased $15.3B of shares in Q1 2025 but zero shares in Q1 2026. The company suspended buybacks to fund acquisitions (Wiz $29.5B, Intersect $5.9B), Waymo funding ($16B majority-funded by Alphabet), and the $40B private company investment commitment.

The description of Google One now explicitly includes "access to our most capable Gemini models," indicating that premium AI features are being monetized through the Google One subscription tier. This was not disclosed in the baseline filing.

The current filing now references "Gemini Enterprise" instead of "Gemini for Google Cloud" and adds "enterprise AI infrastructure" as a distinct offering. This reflects product evolution and clearer segmentation of AI infrastructure versus AI platform services.

The dedicated "European Commission Fines" section has been removed from the current filing. The baseline disclosed €4.1B and €1.5B in EC fines under appeal. The current filing references "$15.6 billion" in accrued legal and regulatory fines but does not break out EC fines separately, suggesting either payment, settlement, or consolidation into general legal accruals.

The current filing discloses $15.6B in short-term accrued legal and regulatory fines, primarily EC fines. This is a new consolidated disclosure replacing the separate EC fines section in the baseline. The increase from prior periods suggests additional accruals for legal and regulatory matters.

The effective tax rate increased from 17.3% in Q1 2025 to 19.2% in Q1 2026, primarily due to acquisition-related tax integration costs, partially offset by increased SBC-related tax benefits and a discrete tax benefit from deconsolidation of one of the Bets (likely GFiber).

The OECD introduced a Side-by-Side Safe Harbor in January 2026 that exempts US domestic operations from global minimum tax rules if elected. Alphabet discloses this had no material effect in Q1 2026, but notes foreign subsidiaries remain subject to local minimum tax requirements.

Alphabet added "Business Combinations" as a new critical accounting estimate, reflecting the materiality of the Wiz ($29.5B) and Intersect ($5.9B) acquisitions. The disclosure highlights judgment required in valuing acquired intangible assets, including customer attrition rates, discount rates, and royalty rates.

Google now explicitly discloses risks around major AI infrastructure investments, including custom TPU development and AI integration across products. This represents a new category of capital allocation risk not previously itemized in quarterly risk factors.

New disclosure warns that rapid technology changes could shorten the useful lives of infrastructure assets, potentially triggering accelerated depreciation or impairments. This directly impacts future earnings quality and capital efficiency metrics.

Google now discloses it has provided financial guarantees backing third-party data center and power infrastructure buildouts. These off-balance-sheet commitments create contingent liabilities that could materialize if counterparties fail to perform or if cloud demand weakens, leaving Google with stranded capacity.

Google is now supplying custom TPU hardware directly to cloud customers, moving beyond internal use. This vertical integration into hardware supply chains introduces manufacturing, logistics, and warranty risks not present in pure software-as-a-service models.

New disclosure highlights that data sovereignty and localization mandates may force Google to build country-specific cloud infrastructure and partner with local entities, fragmenting operations and increasing compliance costs. Failure to meet these requirements could exclude Google from key markets.

Google now explicitly flags that AI products create ethical and regulatory risks that could damage brand reputation and reduce product demand. This acknowledges growing scrutiny around AI safety, bias, misinformation, and potential regulatory restrictions.