Alphabet's first-quarter results beat analyst expectations on both revenue and cloud performance, with Google Cloud revenue of $20.03 billion（約3.2兆円） exceeding forecasts and the company's cloud backlog doubling to more than $460 billion（約74兆円）. Morgan Stanley upgraded its price target and rating, citing improving fundamentals driven by strong AI and cloud demand. The company has begun restricting third-party access to its Gemini model due to high usage, signaling tight capacity amid surging enterprise demand.
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Alphabet reported $109 billion（約17兆円） in revenue for Q1, beating analyst estimates of $107 billion（約17兆円）, while Google Cloud revenue reached $20.03 billion（約3.2兆円） against estimates of $18.05 billion（約2.9兆円）. The company's cloud backlog doubled to more than $460 billion（約74兆円） in the quarter. A Financial Times report from June 28th indicated Alphabet had restricted Meta's access to its Gemini model due to high usage.
Why it matters
The sharp growth in cloud backlog and revenue outperformance signal strong demand for Alphabet's AI and cloud services. Morgan Stanley raised its share price target to $415 from $375 on June 30th and reiterated an Overweight rating, citing improving fundamentals that create a tactical buying opportunity. This suggests the market sees sustained momentum from enterprise AI adoption.
What to watch
Alphabet's stock has risen 103% over the past year and closed 9.9% higher on April 30th following the earnings announcement. The doubling of cloud backlog and restrictions on third-party access to Gemini indicate how competition for AI model availability is shaping commercial strategy.
Alphabet's Q1 results reflect the growing commercial value of AI infrastructure and cloud services as enterprises scale their AI workloads. The doubling of cloud backlog to more than $460 billion（約74兆円） suggests a substantial pipeline of future revenue, while the beat on Google Cloud revenue signals that current demand is materializing faster than Wall Street anticipated. The restriction of Meta's Gemini access, reported in late June, adds texture to this picture: as demand for Alphabet's AI model outpaces supply, the company faces choices about capacity allocation among competing customers.
Morgan Stanley's upgrade in late June — raising the price target to $415 from $375 and emphasizing improving fundamentals — appears to reflect confidence in Alphabet's ability to monetize its AI position through cloud infrastructure. The firm's observation that fundamentals are "improving" suggests that prior skepticism about AI-to-revenue conversion has begun to ease. For investors, the key forward indicator will be whether the backlog converts to revenue growth while the company manages access and capacity constraints across its AI products.
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