Alphabet approaches Nvidia in the race to become the world's most valuable company following strong Q1 earnings in cloud services, search, and AI.

      **TL;DR**

      Alphabet's market capitalization surpassed $4.6 trillion following a 10% rise in stock prices after its Q1 2026 earnings exceeded expectations in every division. Google Cloud grew by 63%, exceeding $20 billion, while search queries reached an all-time high. The gap with Nvidia, which dropped 6% amid reports of OpenAI missing growth targets, has narrowed to about $200 billion. Options traders estimate a 53% chance that Alphabet will become the most valuable company before mid-May.

      On Thursday, Alphabet's stock increased nearly 10%, with Q1 revenue hitting $109.9 billion—a 22% year-over-year growth that surpassed analyst predictions by nearly $3 billion. Google Cloud achieved over $20 billion in quarterly revenue for the first time, witnessing a 63% growth rate. The cloud backlog almost doubled from the previous quarter to over $460 billion, and earnings per share rose by 81%. The stock closed at $381.94, raising Alphabet's market cap above $4.6 trillion. Nvidia, which ended the day at $198.61 with a market cap around $4.8 trillion, fell over 6% over two sessions after the Wall Street Journal reported OpenAI's internal targets for users and revenue were not met.

      The difference between the two companies is now about $200 billion. Options traders suggest a 53% likelihood that Alphabet will reach a $5 trillion valuation by May 15. Should that happen, without significant gains for Nvidia ahead of its earnings report on May 20, Alphabet would reclaim its title as the world's most valuable company, a position it last held briefly in February 2016, surpassing Apple.

      **The Earnings**

      The numbers that influenced the market weren't just substantial; they were also notably different from Alphabet's figures from a year prior. Google Cloud's 63% growth rate surpassed 48% from the previous quarter, making it the fastest-growing among the three primary cloud platforms. AWS grew at 17%, while Microsoft Azure expanded by 33%. Although Google ranks third in market share, it is growing nearly double the rate of Azure and almost four times that of AWS. CEO Sundar Pichai informed analysts that the company is currently limited in computing capacity, suggesting cloud revenue could have been higher had supply met demand. Revenue from products based on generative AI models soared nearly 800% year-over-year. YouTube advertising rose to $9.9 billion, up 11%, and Alphabet boasts 350 million paid subscriptions across YouTube Premium, YouTube Music, and Google One.

      **The Capital Expenditure Guidance**

      Alphabet raised its 2026 capital expenditure forecast to between $180 billion and $190 billion, up from the previously estimated $175 billion to $185 billion range. The total 2026 capex across the five major hyperscalers is on track to surpass $650 billion, a figure greater than the GDP of most European nations. Alphabet's aggressive spending is driven by Google Cloud's growth, indicating that the returns on investments in AI infrastructure are materializing more quickly than anticipated. The $460 billion backlog represents contracted demand that will convert into revenue over several years, meaning Alphabet's cloud business is not speculative; customers have already committed.

      **The Divergence**

      Nvidia's setback was not due to its own fundamentals. The company announced $68.1 billion in revenue for its latest quarter, with data center revenue jumping by 75%. Its earnings report, anticipated on May 20, is expected to reveal around $78 billion in revenue—a 78% increase year-over-year. Nvidia remains the key supplier of GPUs for major AI training and inference workloads globally. However, the narrative shifted regarding Nvidia's largest clients. OpenAI's $852 billion valuation faced scrutiny as its growth metrics failed to accelerate at the pace investors expected. Reports of OpenAI missing internal revenue and user goals negatively impacted Nvidia, suggesting that demand for AI chips might not be as boundless as presumed. Consequently, AMD fell 6%, Arm dropped 8%, and Broadcom slid 5%, with the semiconductor sector suffering due to concerns about the largest buyer of AI chips not meeting growth expectations.

      The contrast between Alphabet and Nvidia underscores broader issues about where value is created in the AI economy. Nvidia supplies the tools, while Alphabet uses those tools to create products, selling what results from them. Google Cloud’s $20 billion in quarterly earnings came from providing AI infrastructure and services to businesses. The record volume of queries in Google Search was fueled by AI Overviews—a feature that employs generative models to answer questions directly on the search results page. YouTube's advertising revenue benefits from AI-driven recommendations and content moderation. Alphabet isn't merely purchasing AI chips; it’s generating revenue utilizing these chips across three distinct business lines, each independently yielding more quarterly revenue than most tech companies earn in a year.

      **The Infrastructure Layer**

      The market is beginning to recognize a