Google's blowout earnings could revive the rest of the Magnificent 7

Happy Friday, investors. Increasingly, company earnings have become a story of forward guidance more than performance — and what Alphabet reported last night holds ramifications for the biggest tech firms in the world.

AI trade redux?

Google just reminded the world that it still knows how to print cash. 

Alphabet stock rallied in overnight trading after the company reported a stronger-than-expected earnings beat on Thursday. Prior to earnings, shares had fallen 15.3% so far in 2025, mirroring the 16.6% fall for the Magnificent Seven as a group.

Here’s how the tech giant performed in the first quarter versus LSEG estimates: 

• Earnings per share: $2.81 actual, $2.01 expected

• Revenue: $90.2 billion actual, $89.1 billion expected

Compared to a year ago, revenue grew 12%, more than the 10% consensus forecast, while net income jumped 46% to $34.5 billion. 

“This quarter was super exciting,” said CEO Sundar Pichai, “as we rolled out Gemini 2.5, our most intelligent AI model, which is achieving breakthroughs in performance and is an extraordinary foundation for our future innovation.”

As large as the Google-parent’s windfall was to start the year, so are its spending plans. Capital expenditures surged 43% to $17.2 billion in the quarter compared to 2024, the highest in company history.

Management signaled even more investment to come as Alphabet races to build out data centers and AI infrastructure. 

Not only is that level of spending a bet on Alphabet’s own future, but it’s a green light for investors who have been wondering whether the AI trade had petered out or fallen victim to tariff uncertainty. 

“The read-through here is a positive for Nvidia, given that AI infrastructure is demanding massive spend from tech giants,” Bret Kenwell, an investment analyst with eToro, told Opening Bell Daily. “If the rest of [the Magnificent 7] reports earnings like Alphabet did, then perhaps mega-cap tech can help lead to some much-needed stabilization in the broader market rather than acting like the anchor that it’s been.”

Aside from its AI spending plans, Alphabet’s numbers showed its core engine is still humming. Ad revenue hit $66.9 billion, up more than 8% year-over-year, and Cloud grew 28% to $12.2 billion. 

Alphabet also announced a 5% dividend hike to $0.21 and a $70 billion stock buyback program.

To be clear, Alphabet has dealt with recent antitrust lawsuits in the US and European regulators are still circling. The risk of forced divestitures or changes to its business model loom indeed large.

That said, Alphabet is not spending like a company that’s worried about the future. 

Google’s checkbook is open, the AI race remains a priority, and the rest of the Magnificent Seven may have just found their next leg higher. 

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