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On Wednesday, Google reported its highest revenue growth rate in a single quarter in roughly four years. The tech giant\u2019s revenue soared 20% in the first quarter of 2026 thanks in large part to the $20 billion in sales that the cloud computing unit in charge of its AI initiatives brought in.<\/p>\n
The news is particularly huge considering that only a day ago, the AI industry was rocked with a Wall Street Journal report claiming that OpenAI had missed its own revenue and user targets because ChatGPT growth had slowed toward the end of last year. The revenue growth miss was reportedly bad enough to have CFO Sarah Friar worried about whether the AI giant could pay for its computing contracts. The reason, according to the report, was that Google\u2019s Gemini had eaten into ChatGPT\u2019s market share.<\/p>\n
OpenAI is not a public company, so its financials are not made public and we can\u2019t truly compare numbers, but as the creator of ChatGPT, OpenAI has enjoyed a leading position in the industry since it began the AI hype cycle a couple of years ago. But that position has been questioned over the past few months, particularly following on the heels of Google\u2019s pretty well-received Gemini 3 release. Only a few weeks after Gemini 3 dazzled users, OpenAI declared a \u201ccode red\u201d at the company.<\/p>\n
OpenAI has double the reason to be afraid of the Wednesday earnings report because it was Google\u2019s competitor offerings that really brought in the stellar revenue.<\/p>\n
\u201cThe largest contributor to Cloud\u2019s growth this quarter was AI solutions, driven by strong demand for industry-leading models, including Gemini 3,\u201d Google parent company Alphabet\u2019s CFO Anat Ashkenazi said in the company\u2019s earnings call. CEO Sundar Pichai also said Google\u2019s open models had been downloaded \u201cover 500 million times.\u201d<\/p>\n
Google is shaping up to be a huge presence in the AI game, and a major competitor not just to AI tool providers like OpenAI and Anthropic, but also increasingly to infrastructure giant Nvidia. The company\u2019s TPU chips have been rising in popularity and finding big-name clients like Meta. In the call, Ashkenazi said that they were \u201cseeing unprecedented internal and external demand for AI compute resources.\u201d<\/span><\/p>\n Among its competitors, Google enjoys a rare positioning as a leading competitor in both tools and infrastructure, and it\u2019s the exact thing that executives are banking on for success.<\/p>\n \u201cThe fact that we own frontier models [and] own the silicon really helps us stay ahead of the curve,\u201d Pichai said.<\/p>\n That positioning also makes Google\u2019s cloud business a crucial indicator of the health of the AI boom. Investors have gambled unimaginable amounts of money on the fact that AI demand will play out as promised by the industry, and the recent OpenAI report has gotten people worried that might not be the case. Google\u2019s numbers might provide some solace, at least for now.<\/p>\n As for what\u2019s next, company executives shared that the focus right now is on AI mode, Google\u2019s biggest bet in incorporating AI into the Search experience.<\/p>\n Pichai also said that there is \u201ca huge opportunity ahead\u201d for agentic AI \u201cin the context of Search.\u201d That premise of having an AI system browse the internet for you is something the company has been really banking on, to varying degrees of success.<\/p>\n \u201cObviously, we are in very, very early innings of all that, but our investments in our full-stack AI approach, I think, put us in a good position to bring those experiences to Search,\u201d Pichai said. Company executives also said to expect news about Search at the upcoming Google I\/O conference in mid-May, though they did not specify whether it would have something to do with AI.<\/p>\n On the Gemini side of things, Google executives said their main focus is on the free offerings, and while there is no rush, ads are probably going to be introduced at one point to the chatbot.<\/p>\n \u201cLet\u2019s also be clear, ads have always been a big part of scaling products to reach billions of people, and if done well, ads can be really valuable and really helpful commercial information, and at the right moment, we\u2019ll share any plans,\u201d Google\u2019s chief business officer Philipp Schindler said in the call.<\/p>\n<\/p><\/div>\nAgentic search and ads in Gemini<\/h2>\n