CEO Sundar Pichai Says Google Is Having a ‘Terrific Start’ to the Year. Mag-7 Investors Agree as GOOGL Stock Leads the Way.

Alphabet (GOOG) (GOOGL) stock is up 26% in just the past month, and it isn't surprising if you were following all the good news that was brewing for over a year. This is the only hyperscaler that touches almost every high-growth sector you can think of. Cloud? Google has it. Hardware? Google sells TPUs. AI? Google is closing the gap and has taken the lead in many areas.

Investors still don't think the company is done. It is instead chasing the title of being a leading hyperscaler stock among the Magnificent 7. Alphabet has very competitively developed its AI software-development stack, and the fruits of it are lifting the entire business. The CEO of Google, Sundar Pichai, certainly agrees, and so do Mag-7 investors.

Why “2026 Is Off to a Terrific Start”

Sundar Pichai opened the company's Q1 2026 earnings call with a clear message of momentum: "2026 is off to a terrific start." He attributed the strong performance to Google's "AI investments and full-stack approach," stating they are "lighting up every part of the business."

This wasn't just executive optimism, as Alphabet reported its 11th consecutive quarter of double-digit growth. Consolidated revenues hit $109.9 billion for the quarter. It's up 22% year-over-year (YoY) and has beaten analyst estimates of $107.2 billion.

Is Alphabet Leading the Mag-7 Now?

If you look at year-to-date (YTD) performance, GOOGL stock is a winner among all Mag-7 stocks, and the gap could widen even more due to Google's dominance being entrenched in AI. Not only that, but previous doom and gloom scenarios about Google losing its market share in search did not materialize.

Google owns your search bar, and it has profitably managed to integrate AI into it. Most people can comfortably open a new tab and search for whatever they want. And most importantly, they can ask the search bar whatever question they have in mind. The answer they will get will be either in line with what ChatGPT would get you or maybe a tiny bit worse. Regardless, going into ChatGPT is much more cumbersome, so it's not gaining market share against Google in any meaningful way.

The current scenario, where Google not only avoids losing big from AI but instead starts becoming among the most dominant AI companies, would've been unthinkable three years ago.

Stellar Financials

Alongside the revenue growth, operating income grew 30% YoY to $39.7 billion. Operating margin expanded, and net profits are up 81% YoY. Google Cloud was the undeniable highlight of the quarter, with revenue accelerating to $20.03 billion. This was the first time the segment crossed $20 billion, that too with an acceleration in growth, from 48% YoY in Q4 to 63% YoY in Q1 2026.

The backlog nearly doubled sequentially to over $460 billion. Gemini Enterprise also saw a 40% quarter-over-quarter growth in paid monthly active users.

If anything, this proves that Google is benefiting from AI instead of losing out.

But There Is a Catch

As with any hyperscaler, the biggest catch is the spending. There is an undercurrent of investor caution around Alphabet's unprecedented capital expenditure. The company spent $35.7 billion in Q1 2026 alone and raised its full-year 2026 AI capex guidance to $180 billion to $190 billion (up from the prior $175 billion to $185 billion range).

Management also signaled that 2027 spending will "significantly increase" from 2026 levels. You're looking at a massive infrastructure build that is meant to secure Google's position in the AI race.

Regardless, the stock remains at a fair value or even slightly cheap despite the rally if you are an AI bull. Analysts are looking at ~20% annual sales growth going forward with strong margin growth, so I'd expect GOOGL stock to follow that earnings growth and then some.

There are no sell ratings here, either.

I expect GOOGL stock to move towards the high target of $515 and beyond this year.