Honestly I owe the GOOGL bulls an apology.
Back in late 2025 I was convinced the AI disruption thesis was real - that ChatGPT and Perplexity were slowly bleeding Google Search dry. I even trimmed my position. Turns out I was wrong, and the Q1 numbers make that pretty clear.
Revenue came in at $109.9 billion, up 22% year over year. Fine, big number, easy to gloss over. But what actually got my attention was the EPS - $5.11 against a consensus of $2.62. That's not a beat, that's an embarrassment for the analysts. Net income up 81% to $62.6 billion in a single quarter.
The Cloud number is what really flipped me. $20 billion in quarterly Cloud revenue, growing 63% year over year. For context, Google Cloud was doing around $6 billion a quarter back in 2022. Three years later it's tripled. The contracted backlog sitting at $460 billion basically locks in the next two years of growth before they sell another dollar.
And Search - the thing everyone said was dying - grew 19%. Queries are at all time highs. Turns out AI features inside Search are bringing more people in, not pushing them to competitors.
The one thing I'm not ignoring is the CapEx. $35.7 billion spent in a single quarter, full year guided at $180 to $190 billion. Free cash flow margin dropped from 21% to 9.2%. If the AI monetization story stalls, that spending becomes a very ugly problem very fast.
But right now the results are speaking louder than the concerns. Anyone who bought during the 2022 panic at $83 is sitting on roughly 4x. The lesson keeps being the same with quality compounders - the disruption headline is rarely as fatal as it sounds.
Curious if anyone else has changed their view on GOOGL recently, or if you're still skeptical.