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Google (GOOG) reported Q1 EPS of $5.11 vs. $2.63 consensus, with Search revenue surging 19% to $60.4B as AI Overviews drove queries to all-time highs.

Google’s Search engine is defying the two-year bear thesis that AI would cannibalize the business, with AI features deepening user engagement.

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Here’s What Happened

Alphabet (NASDAQ:GOOG) reported Q1 FY2026 results after the close on April 29, 2026, and investors loved what they saw. EPS came in at $5.11 against a $2.63 consensus, revenue topped estimates, and shares jumped 6.08% in early trading. The headline story might not have been Search — the segment AI was supposed to kill — but it outshone even Cloud’s monster growth.

AI Pours Gas on the Search Engine

The bear case on Google for two years was simple: ChatGPT and generative AI would hollow out Search. The Q1 numbers say the opposite. Google Search & other revenue hit $60.40 billion, up 19% year over year, with management citing queries at all-time highs as AI Overviews and AI Mode pulled users deeper into the product.

Put differently, Search alone now generates roughly $671.1 million in revenue every single day, up from $563.3 million a year ago. Google Cloud was technically the star with 63% growth and a backlog over $460 billion, but Search reaccelerating at this scale is the more important narrative shift. I liked it because it directly invalidates the loudest part of the bear thesis.

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The Capex Bill Is Coming Due

The only thing I’d keep an eye on is cash. Capital expenditures hit $35.67 billion, up 107% year over year, and free cash flow fell to $10.12 billion, down 47%. Google Network revenue also slipped to $6.97 billion from $7.26 billion. Net income was flattered by $36.91 billion in unrealized equity gains, so do not anchor to that 81% figure.

Search Carries the Quarter

Key Figures

Adjusted EPS: $5.11 (vs. $2.63 expected); a 94.1% beat

Revenue: $109.90B (vs. $107.03B expected); up 21.8% YoY

Operating Income: $39.70B; up 30% YoY

Operating Margin: 36.1%, up roughly 2 percentage points

Google Cloud Revenue: $20.03B; up 63% YoY

YouTube Ads: $9.88B; up 11%

Dividend: raised 5% to $0.22 per share

You should look at Search revenue. A 19% growth print on a $60 billion line item is the quiet breakthrough of this report.

Pichai Leans Into the Full Stack

CEO Sundar Pichai said “2026 is off to a terrific start. Our AI investments and full stack approach are lighting up every part of the business. Search had a strong quarter with AI experiences driving usage, queries at an all time high, and 19% revenue growth.” He also flagged that Gemini is processing more than 16 billion tokens per minute, up 60% from last quarter. The tone was confident without being promotional.

Retail Checks In

Sentiment online matched the stock’s move. A very bullish 88 score on r/wallstreetbets coalesced around a viral post titled “1000% and chill,” where the author wrote, “thank you for the down payment, truck, and enjoy your old age as we approach 4000 days.” Long-term holders are taking a victory lap.

Can Search Keep Defying the Bears?

The story from here is whether AI Overviews and AI Mode keep compounding query growth without eroding ad load economics. With shares up 115% over the past year, expectations are no longer cheap. I’ll be watching Search monetization trends and the cadence of that $460 billion Cloud backlog converting into revenue.

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