Why Alphabet Stock Soared 34% in April -- One Catalyst Is Its Move to Challenge Data Center AI Chip Leader Nvidia

Key Points

In April, Alphabet benefited from the overall market's strength, but also had company-specific catalysts.

Its primary catalyst was an incredibly strong first-quarter report, driven by a 63% year-over-year surge in Google Cloud revenue.

Google Cloud's incredible growth is being driven by powerful demand for its AI products and infrastructure.

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Shares of Google parent Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) rocketed 33.8% higher in April, according to data from S&P Global Market Intelligence.

Last month was Alphabet's best monthly performance since October 2004, two months after its initial public offering (IPO), when the stock (then named Google) soared 47.1%.

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For additional context, in April, the S&P 500 index returned 10.5%, and the tech-heavy Nasdaq Composite index returned 15.3%. Artificial intelligence (AI)-related stocks overall had a particularly good month. (Chipmaker Advanced Micro Devices, for instance, skyrocketed 74% in April.)

So, Alphabet stock got a brisk tailwind from the market's strength, but it also had company-specific catalysts.

Powerful Q1 results, driven by Google Cloud

Alphabet stock climbed steadily throughout April, with its biggest jump coming at the end of the month after it released stellar first-quarter 2026 results on April 29. On April 30, shares surged 10%.

Following this release, many Wall Street firms significantly raised their one-year price targets.

In Q1, Alphabet's revenue grew 22% year over year to $109.9 billion. Google Services revenue increased 16% to $89.6 billion, while Google Cloud revenue soared 63% to $20.0 billion, driven by strong demand for its AI products and infrastructure. The company's broad-based, robust results underscore its success in monetizing its AI spending.

Earnings per share (EPS) increased 82% year over year to $5.11, crushing the Wall Street estimate of $2.63. However, a big chunk of net income ($36.9 billion) came from unrealized gains on investments in non-marketable private equities.

We can assume these "paper gains" refer primarily to AI model builder Anthropic -- a main competitor to ChatGPT creator OpenAI -- and, probably to a lesser degree, SpaceX. Alphabet is a significant investor in both of these high-growth companies, which could be a big boon for it once they go public.

The best metric to gauge Alphabet's operating performance is operating income. This metric was $39.7 billion in the quarter, up 30% year over year.

Google Cloud backlog is growing like gangbusters

CEO Sundar Pichai highlighted an especially standout statistic about Google Cloud on the earnings call: "[O]ur backlog nearly doubled quarter on quarter to over $460 billion." Note this is sequential quarter growth, not year over year.

This incredible backlog growth bodes very well for Google Cloud's growth over at least the next several years.

Alphabet will sell its TPUs to select customers

Pichai revealed a new revenue stream on the company's earnings call:

As TPU [Tensor Processing Unit] demand grows from AI labs, capital markets firms, and high-performance computing applications, we will begin to deliver TPUs to a select group of customers in their own data centers in a hardware configuration to expand our addressable market opportunity.

In April, the company introduced its eighth-generation TPUs, each specialized for either AI training (TPU 8t) or AI inference (TPU 8i). Up until now, TPUs have only been available for customers to rent on Google Cloud. This strategic move presents a potential challenge to the leader in data center AI-enabling chips, Nvidia, and its graphics processing units (GPUs).

In short, Alphabet is performing well across its consumer-facing businesses and its enterprise offerings. Its plan to start selling TPUs will provide a new revenue stream. Moreover, its early investments in Anthropic and SpaceX should prove to be lucrative. Its stock is worth considering buying.

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Beth McKenna has positions in Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, and Nvidia. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.