ETFs to Watch as Alphabet Rides Cloud Surge, Beats Estimates
Alphabet GOOGL came up with first-quarter 2026 earnings on April 29, after market close. Earnings of $5.11 per share surpassed the Zacks Consensus Estimate of $2.64 by a staggering 93.56%. The bottom line marked an improvement of 81.85% from earnings of $2.81 per share recorded in the same period last year.
GOOGL shares gained about 6.4% in pre-market trading on April 30. As quoted on the tech giant’s earnings release, Sundar Pichai remarked that 2026 has begun on a strong note, describing the quarter as the company’s strongest yet for its consumer AI initiatives, driven by the Gemini app.
Pichai, CEO of Alphabet and Google, added that total paid subscriptions have climbed to 350 million, primarily driven by YouTube and Google One. Meanwhile, Gemini Enterprise continues to gain traction, with paid monthly active users growing 40% quarter over quarter.
Snapshot of Q1 Earnings
The tech giant posted revenues of $94.67 billion for the quarter ended March 2026, surpassing the Zacks Consensus Estimate of $92.22 billion by 2.65%. This marked a substantial increase of 23.77% from the year-ago quarter.
Alphabet’s net income for the quarter saw a substantial surge of about 81.17% from the year-ago quarter to $62.58 billion. The tech giant’s operating income for the quarter was $39.69 billion, which marked an increase of 29.7% from the year-ago quarter.
Segment Snapshots
First-quarter revenues from Google advertising reached $77.25 billion, up 15.5% from the year-ago quarter. Revenues from Google Search & other, which reached $60.39 billion in the first quarter, marked a rise of 19.13% from $50.70 billion in the year-ago quarter.
Revenues from Google Services for the quarter increased 16.02% from the year-ago quarter, reaching $89.64 billion. Operating income from the segment reached $40.59 billion for the quarter ended March 2026, marking an increase of 24.19% from the prior-year figure of $32.68 billion.
Alphabet’s Google Cloud business witnessed a substantial surge, with operating income increasing to $6.59 billion, an impressive 203.08% increase from the prior-year figure of $2.18 billion. Revenues from the Cloud segment also witnessed a substantial rise of 63.36% year over year to $20.03 billion, driven by growth in Google Cloud Platform (GCP) across core GCP products, AI Infrastructure and enterprise AI Solutions.
According to a Reuters article, the company’s robust cloud performance underscores AI’s emergence as a key growth driver, signaling a turnaround after years of lagging larger peers. The sharp acceleration, fueled by demand for generative AI tools, suggests its heavy investments are beginning to pay off, reinforcing confidence in its ability to translate deep research capabilities into commercial gains.
Capex Surge Signals Aggressive Growth Push
Alphabet indicated that it will continue ramping up capital expenditures at an aggressive pace. According to the abovementioned Reuters article, first-quarter capital spending surged more than twofold year over year to $35.67 billion. In total, Alphabet deployed $91.45 billion in capex during 2025.
Anat Ashkenazi, the Wall Street giant’s CFO, lifted the company’s full-year capex outlook to $180-$190 billion, up $5 billion from the prior quarter’s guidance and indicated that Alphabet is poised for another notable increase in spending in 2027.
Investors continue to show greater confidence in Alphabet than Meta META when it comes to deploying capital in AI, as per a CNBC article. In contrast to GOOGL’s performance, despite a similar spending trend, META saw a negative market reaction, with shares falling about 9% in pre-market trading on April 30.
The difference lies in monetization. While Alphabet and fellow hyperscalers Microsoft and Amazon leverage large cloud platforms to monetize AI investments, Meta Platforms lacks a comparable revenue channel.
Alphabet’s Stock Outlook
Alphabet currently has an average brokerage recommendation( ABR) of 1.25 on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations made by 56 brokerage firms. The current ABR compares to an ABR of 1.23 a month ago, based on 56 recommendations.
Of the 56 recommendations deriving the current ABR, 47 are Strong Buy and four are Buy. Strong Buy and Buy, respectively, account for 83.93% and 7.14% of all recommendations. A month ago, Strong Buy made up 85.71%, while Buy represented 5.36%, indicating that the majority of the analysts remain bullish.
Based on short-term price targets offered by 53 analysts, the average price target for Alphabet comes to $380.77, ranging from a low of $220.00 to a high of $420.00. The average price target represents an increase of 9.63% from the last closing price of $347.31 (as of market close on April 29).
ETFs to Explore
Here, we have highlighted ETFs with heavy exposure to Alphabet.
Global X PureCap MSCI Communication Services ETF GXPC has an exposure of 30.37% to GOOGL.
VanEck Communication Services TruSector ETF TRUC has an exposure of 16.19% to GOOGL.
Vanguard Communication Services ETF VOX has an exposure of 13.14% to GOOGL.
Fidelity MSCI Communication Services Index ETF FCOM has an exposure of 13.06% to GOOGL.
iShares Global Comm Services ETF IXP has an exposure of 12.12% to GOOGL.
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Alphabet Inc. (GOOGL) : Free Stock Analysis Report
Vanguard Communication Services Index Fund ETF Shares (VOX): ETF Research Reports
Fidelity MSCI Communication Services Index ETF (FCOM): ETF Research Reports
iShares Global Comm Services ETF (IXP): ETF Research Reports
Meta Platforms, Inc. (META) : Free Stock Analysis Report
Global X PureCap MSCI Communication Services ETF (GXPC): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).