Earnings Preview | Google's Q1 cloud business is expected to grow by 50%, with the market closely watching whether massive investments in AI can be converted into profits

According to Zhitong Finance APP, Google (GOOGL.US) will release its Q1 2026 earnings report after the market closes on April 29 (Wednesday) Eastern Time. The market expects the company's earnings per share to reach $2.64, a decrease of 6.1% compared to the same period last year. Analysts predict that its revenue will reach $92.22 billion, a year-on-year increase of 20.6%.

Specifically, analysts forecast that "YouTube advertising revenue" will reach $10.03 billion, reflecting a 12.4% increase compared to the same period last year. The market generally expects "Google Cloud revenue" to be $18.4 billion, indicating a year-on-year growth of 50.1%. Analysts' estimates suggest that "Google advertising revenue" will reach $76.91 billion, showing a 15% increase compared to the same period last year.

In addition, analysts' average forecast sets "Google Search and Other Business Revenue" at $59.66 billion, indicating a year-on-year growth of 17.7%. Analysts predict that "Google Network Revenue" will reach $7.18 billion, reflecting a year-on-year decrease of 1.1%. Analysts generally believe that "Google Subscription, Platform, and Device Revenue" will reach $12.12 billion, indicating a year-on-year growth of 16.8%.

From a regional perspective, analysts collectively judge that "revenue from Europe, the Middle East, and Africa" will reach $32.51 billion, a year-on-year increase of 25.4%; "U.S. revenue" is expected to be $51.88 billion, an 18% increase compared to the same period last year; "Other Americas revenue (Canada and Latin America)" is expected to reach $665 million, a year-on-year increase of 27%; "Asia-Pacific revenue" is comprehensively assessed at $19.01 billion, a year-on-year increase of 28%.

Additionally, "Total Acquisition Cost (TAC)" is expected to reach $15.39 billion, up from $13.75 billion in the same period last year; "Employee count" is expected to be 192,820, an increase from 185,719 in the same period last year. These specific indicators provide investors with a more detailed insight into performance.

It is worth mentioning that over the past year, Google's capital expenditure has come under strict scrutiny due to the rapid expansion of AI infrastructure. The company's previously disclosed capital expenditure budget for 2026 has soared to between $175 billion and $185 billion, with the bulk of this funding directed towards data center expansion and the procurement of customized high-performance AI chips.

The current market focus is on whether this "aggressive" investment has crossed the breakeven point and begun to translate into marginal improvements in profit margins. Investors are closely monitoring the operating profit margin performance for the quarter, trying to assess whether Google can maintain its long-term profit resilience amid the dual pressures of high chip supply chain costs and technology R&D investments, leveraging economies of scale.

Google Cloud's performance this quarter is highly anticipated, as the first battlefield for AI implementation. Market analysts generally believe that the cloud business must maintain over 50% high-speed growth to prove that native AI models like Gemini possess strong market penetration and the commercial potential to attract enterprise customers to pay At the same time, the market holds a cautious attitude towards Google's core asset—its search business. In the face of competition from OpenAI and emerging AI search tools, Google is accelerating the integration of the "AI Overview" feature into search results. The qualitative analysis during this earnings call regarding how AI will reshape advertising click-through rates and user retention will directly determine the market's reassessment of the stability of Google's search "moat."

In addition to organic growth, Google's recent capital operations have also added extra focus to the earnings report. The company previously announced an investment of up to $40 billion in the AI unicorn Anthropic and completed a strategic integration of the cybersecurity giant Wiz for a staggering $32 billion. These moves signify that Google is attempting to build a complete ecological closed loop from underlying computing power to top-level security applications through external acquisitions.

Considering that Chief Accounting Officer Amie Thuener will soon leave after the earnings report is released, investors will also closely monitor whether changes in the financial management team will lead to adjustments in future financial strategies, as well as how the company balances shareholder returns with technological leadership in a complex macroeconomic environment and intense industry competition