On Wednesday, Google reported its highest single-quarter revenue growth rate in about four years. The tech giant’s revenue soared 20% in the first quarter of 2026 thanks in large part to the $20 billion in sales generated by the cloud computing unit in charge of its artificial intelligence initiatives.
The news is particularly huge considering that just a day ago, the AI industry was rocked by a Wall Street Journal. report alleging that OpenAI had missed its own revenue and user goals because ChatGPT’s growth had slowed toward the end of last year. The loss of revenue growth was reportedly severe enough that CFO Sarah Friar worried about whether the artificial intelligence giant would be able to pay for its IT contracts. The reason, according to the report, was that Google’s Gemini had eaten into ChatGPT’s market share.
OpenAI is not a public company, so its financials are not made public and we can’t really compare numbers, but as the creator of ChatGPT, OpenAI has enjoyed a leading position in the industry since the AI hype cycle began a couple of years ago. But that position has been questioned in recent months, particularly after Google’s nice launch. well received Gemini 3 release. Just a few weeks after Gemini 3 dazzled users, OpenAI declared “code red” in the company.
OpenAI has twice as much reason to fear Wednesday’s earnings report because it was Google’s competing offerings that really generated stellar revenue.
“The biggest contributor to cloud growth this quarter was artificial intelligence solutions, driven by strong demand for industry-leading models, including Gemini 3,” Anat Ashkenazi, chief financial officer of Google parent company Alphabet, said on the company’s earnings conference call. CEO Sundar Pichai also said Google’s open models had been downloaded “more than 500 million times.”
Google is emerging as a big presence in the AI game and a major competitor not only to AI tool providers like OpenAI and Anthropic, but also, increasingly, to infrastructure giant Nvidia. The company’s TPU chips have been gaining popularity and find big name clients like Meta. On the call, Ashkenazi said they were “seeing unprecedented internal and external demand for AI computing resources.”
Among its competitors, Google enjoys rare positioning as a leading competitor in both tools and infrastructure, and it’s exactly what executives rely on for success.
“The fact that we own cutting-edge models (and) we own the silicon really helps us stay ahead of the curve,” Pichai said.
That positioning also makes Google’s cloud business a crucial indicator of the health of the AI boom. Investors have bet unimaginable amounts of money on the fact that demand for AI will develop as promised by the industry, and the recent OpenAI report has people worried that this may not be the case. Google’s numbers might provide some solace, at least for now.
Agent search and ads on Gemini.
As for what’s next, company executives shared that the focus right now is on AI mode, Google’s biggest bet to incorporate AI into the search experience.
Pichai also said there is “a huge opportunity ahead” for agent AI “in the context of search.” That premise of having an artificial intelligence system that browses the Internet for you is something the company has really been betting on, to different degrees of success.
“Obviously, we’re in the early stages of all of that, but I think our investments in our full-stack AI approach put us in a good position to bring those experiences to Search,” Pichai said. Company executives also said they would expect news about Search at the upcoming Google I/O conference in mid-May, although they did not specify whether it would have anything to do with AI.
On the Gemini side, Google executives said their main focus is on free offers, and while there’s no rush, ads will likely be introduced to the chatbot at some point.
“Let’s be clear too, ads have always been an important part of scaling products to reach billions of people, and if done right, ads can be really valuable and useful business information, and at the right time, we will share any plans,” Google Chief Business Officer Philipp Schindler said on the call.
