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Alphabet reported strong Q1 2026 earnings, with Google Cloud revenue growing 63% YoY, reaching $20.0B, and a backlog doubling to $460B. Gemini Enterprise MAU growth was 40% QoQ, and total tokens processed via API reached 16B per minute, up 60% from the previous quarter. This robust performance, driven by AI initiatives, has led to increased capital expenditures, projected between $180B-$190B for 2026, a significant jump from previous forecasts. Despite high capex, operating margins improved to 36%, and net income surged 81% YoY to $62.57B, with EPS rising to $5.11. The company's advertising revenue also grew 19% YoY, demonstrating the resilience of its core business. Analysts maintain a consensus 'Strong Buy' rating with a mean price target of $419.0, suggesting a potential upside of approximately 6% from current levels. While the stock trades at a premium valuation (Forward PE of 27.02 vs. sector median of 16.80), its strong AI adoption, cloud growth, and improving profitability suggest that the premium may be justified by its sustained earnings growth runway.