Over the next few weeks, many of America's largest companies will release their operating results for the first quarter of 2026. Wall Street will be particularly focused on the technology powerhouses driving the artificial intelligence (AI) boom, because they tend to deliver faster revenue and earnings growth than the rest of the market.
Google parent Alphabet (GOOG +4.94%)(GOOGL +4.79%) is scheduled to report its results on April 29. Investors will receive a valuable update on Google Search's AI transformation, and the booming Google Cloud business, which ended last year with an enormous order backlog for AI computing capacity.
Alphabet stock is trading at an attractive valuation heading into April 29, so should investors buy it right now?
Image source: Alphabet.
Google Search will be front and center
Google Search's advertising business accounts for over half of Alphabet's revenue, so it has an enormous influence over the company's financial performance. Just a couple of years ago, investors were worried that AI chatbots (like OpenAI's ChatGPT) would steal traffic away from traditional search engines because they offer users a more convenient way to access information, thus threatening Alphabet's golden goose.
However, it has now embedded a series of new AI features into Google Search, powered by its Gemini family of large language models. One of them is AI Mode, which allows users to open a chatbot-style interface through the search platform to dive deeper into a particular topic. Alphabet says AI Mode queries average three times longer than traditional search queries, so this particular feature is significantly increasing user engagement.
In fact, Google Search experienced more usage than ever during the fourth quarter of 2025, which resulted in a record $63.1 billion in revenue for the period. That was a year-over-year increase of 17%, and it was the third straight quarter in which that segment's growth rate accelerated.
On April 29, investors will find out if that momentum carried through into the first quarter of 2026.
Look for a further acceleration in Google Cloud revenue
Developing AIs and large language models requires a substantial amount of computing power, which is why most of it happens inside large data centers that are built around tens of thousands of specialized chips. The average business doesn't have the financial resources to build this infrastructure, nor does it have the technical expertise to create advanced AI models from scratch, but Google Cloud solves both problems.
The cloud platform operates state-of-the-art data centers located all over the world, and it rents their computing capacity to businesses. It also offers access to ready-made AI models, including those from its proprietary Gemini family. These two ingredients can accelerate the development of AI software for practically any business, and demand is through the roof.
Google Cloud generated a record $17.7 billion in the fourth quarter, which was up by a whopping 48% from the year-ago period. As was the case with Google Search, that business unit's revenue growth rate accelerated for the third consecutive quarter.
But Google Cloud also ended 2025 with an eye-popping $240 billion order backlog from businesses that are waiting for more AI data center infrastructure to come online. That backlog was 55% higher than it had been just three months earlier. This suggests that even faster revenue growth could be on the horizon, so the backlog will be a key point of focus for investors on April 29.
Alphabet trades at an attractive valuation heading into April 29
Alphabet stock has rocketed higher by 130% over the past year, but based on the company's earnings of $10.81 per share in 2025, it's still trading at an attractive price-to-earnings (P/E) ratio of 31.3. That is a modest discount to the P/E ratio of the Nasdaq-100 index, which is 32.4 as I write this -- implying Alphabet might be undervalued relative to its peers.
NASDAQ: GOOGL
Key Data Points
Alphabet's positive long-term trajectory is unlikely to have changed significantly in the space of a single quarter, but the April 29 report could certainly add to the momentum in its stock, which is currently at a record high. Robust first-quarter revenue growth for Google Search and Google Cloud would likely do the trick, particularly if it's mostly attributable to AI.
Therefore, Alphabet stock could be a solid investment right now, but investors who buy today should aim to hold it for at least five years to give the company sufficient time to create value from its investments in AI.
