Google just delivered its strongest quarter ever, sending shares up 4% after smashing earnings expectations and cranking AI spending to $93 billion. The search giant's first-ever $100+ billion revenue quarter proves its AI investments are paying off, silencing critics who worried artificial intelligence would cannibalize its core business.
Google just proved the doubters wrong in spectacular fashion. The tech giant's third-quarter earnings demolished Wall Street expectations Thursday, sending shares soaring 4% as investors finally got the AI validation they've been waiting for.
The numbers tell a compelling story of transformation. Alphabet posted revenue of $102.35 billion - its first quarter ever crossing the $100 billion threshold - while earning $3.10 per share. Analysts had expected just $99.89 billion in revenue and $2.33 per share, making this a clean beat across every metric that matters.
But here's what really caught Wall Street's attention: Google isn't just spending on AI, it's spending smart. The company bumped its infrastructure investment guidance to $91-93 billion from $85 billion last quarter, with CEO Sundar Pichai revealing a staggering $155 billion backlog for Google Cloud services.
"Looking out to 2026, we expect a significant increase in CapEx," CFO Anat Ashkenazi told investors during Wednesday's earnings call. That's Wall Street speak for "we're doubling down on AI infrastructure because demand is through the roof."
The timing couldn't be better. While competitors scramble to catch up in the AI race, Google's early investments are generating real returns. Deutsche Bank analysts noted there was "virtually no hair on the print," particularly impressive given Alphabet shares had already climbed 43% since last quarter's results.
The search business - long considered AI's biggest victim - actually thrived. Google's search arm generated $56.56 billion in revenue, up 15% year-over-year, effectively silencing critics who predicted AI chatbots would kill traditional search. Instead, the company's AI-enhanced search features appear to be driving more engagement, not less.
"The AI search transition has been viewed as the greatest risk to Google, but additional signs that AI search is more opportunity than threat will continue to flip the narrative," JPMorgan analysts wrote in a research note, raising their price target to $340 from $300.
was even more bullish, bumping its target to $330 from $288. "We continue to see multiple fronts where Alphabet has climbed a steep wall of worry in the past 12 months around the AI theme," Goldman analysts noted, highlighting how the company has systematically addressed investor concerns.
