Alphabet's AI Fuels $462B Backlog

Alphabet's stock performance surged dramatically over the last year, delivering a 112.9% gain, significantly outperforming the S&P 500. This exceptional growth is attributed to the commercial success and power of its artificial intelligence business.

Google Cloud emerged as a dominant force, with revenue in the first quarter of 2026 jumping 63% to exceed $20 billion. A key indicator of AI's impact is the company's backlog, which nearly doubled in a single quarter to an astounding $462 billion.

Despite this success, Alphabet is confronting significant capacity constraints due to the overwhelming demand for its AI solutions. The CEO acknowledged that cloud revenue could have been higher if demand could be fully met. To address this, the company is allocating substantial capital, with 2026 expenditures guided between $180 billion and $190 billion, and further increases anticipated for 2027.