Alphabet's Hidden Trillion-Dollar Engine

Alphabet's Q1 earnings spotlight a $150B SpaceX windfall, funding a massive AI expansion via Intel partnerships and Anthropic investments, amid regulatory scrutiny.

As Alphabet prepares to unveil its first-quarter results on April 29, investor focus is split between immediate financial performance and a colossal, long-term bet that could redefine the company's financial future. The tech giant's aggressive push into artificial intelligence, marked by a planned capital expenditure surge to $185 billion in 2026, is being quietly underwritten by a prescient investment made over a decade ago.

In 2015, Alphabet invested $900 million into Elon Musk's SpaceX, securing an approximate seven percent stake. With SpaceX having now filed for an initial public offering and targeting a record valuation exceeding $2 trillion, that stake could soon be worth a staggering $150 billion. The company has already booked an $8 billion unrealized gain from this holding in Q1 2025. This potential windfall presents CEO Sundar Pichai with a strategic choice: hold the SpaceX shares for the long term or liquidate them to fund the enormous AI infrastructure build-out.

That infrastructure expansion is taking a multi-pronged approach. This week, Alphabet significantly expanded its hardware partnership with Intel, committing to deploy several generations of Intel’s Xeon-6 CPUs in its AI data centers. The move signals a strategy not solely reliant on in-house chips and aims to challenge Nvidia's dominance, particularly in the growing market for running existing AI applications. The companies are also deepening their joint development of Infrastructure Processing Units (IPUs), specialized chips that handle tasks like networking and encryption to free up the main processor.

Alongside hardware, Alphabet is placing massive strategic bets through direct investments from its balance sheet. The company now holds a 14 percent stake in AI developer Anthropic, an investment exceeding $3 billion, following the startup's valuation surge to $380 billion. Alphabet maintains similar early positions in companies like Stripe and Waymo.

The market has shown volatility in response to Alphabet's ambitious spending plans. After hitting an all-time high of $349 in early February, the stock fell roughly 20% by March following the capex announcement. It has since recovered, currently trading around 17% above its 200-day moving average at €272.50, having nearly doubled over the past twelve months. Analyst sentiment remains bullish, with a consensus "Strong Buy" rating and a median price target of $378.72, despite expectations for a year-over-year profit decline in the upcoming report due to heavy investment.

Regulatory challenges persist in the background. A formal probe into Google's advertising and billing practices commenced in Turkey in early April 2026, while a final decision in the U.S. antitrust case concerning its AdTech business is expected by mid-year.

When Alphabet reports, scrutiny will extend beyond potential further gains from its SpaceX stake. The performance of Google Cloud, which posted a 48% revenue increase in Q4 2025, will be critical to demonstrate that the company's monumental investments are already translating into operational growth.