Alphabet was the only Magnificent 7 stock to rise in after-hours trading following earnings on Wednesday. Meta Platforms, Amazon and Microsoft fell despite all four firms beating analysts’ earnings and revenue forecasts.
Alphabet shares rose 5.8% after-hours, from just under $350 to $370. Meta dropped over 6%, while Microsoft and Amazon each fell by about 2%.
Alphabet Earnings And After Hours Reaction
Alphabet reported GAAP earnings per share of $5.11, above the $2.67 analyst estimate. First-quarter revenue was $109.9 billion, around $3 billion above consensus.
Net income rose by over 80% year on year, mainly due to unrealised gains on nonmarketable equity securities. These securities nearly tripled in value over the past year to almost $37 billion.
Google Cloud revenue rose 63% from a year earlier to $20 billion. Search revenue increased 19% to $60.4 billion.
YouTube advertising revenue grew 11% year on year to nearly $10 billion. Subscription, platforms and devices revenue rose 19% year on year to $12.4 billion.
Options Positioning And Trading Setup
Other Bets and Google Network recorded small revenue declines.
Given the after-hours move to $370, we should expect a significant “IV crush” in Alphabet’s options. Traders who sold puts or short strangles ahead of the announcement are likely seeing significant profits as the uncertainty has been resolved. The focus now shifts from pre-earnings speculation to post-earnings momentum.
The market has clearly signaled its preference, making bullish strategies on GOOGL attractive for the coming weeks. We should look at buying call options or implementing bull call spreads targeting the $400 psychological level. The strong performance in its core Search and Cloud segments provides a fundamental tailwind for this momentum.
This earnings season is creating a clear divergence, which is ideal for pairs trading. Consider buying GOOGL calls while simultaneously buying puts on a competitor like Meta, which showed weakness despite a beat. This strategy bets on Alphabet’s continued outperformance against its hyperscaler peers, insulating the position from broader market risks.
This selective reaction reminds us of the market’s behavior back in 2025, when the initial AI hype gave way to a demand for tangible results. During 2025, we saw many companies make AI promises, but now investors are rewarding only those who demonstrate clear monetization and profit growth. Alphabet is now being viewed as a primary beneficiary, not just a participant.
Google Cloud’s 63% year-over-year revenue growth is a critical statistic that justifies this enthusiasm. Recent industry reports from Q4 2025 showed Google’s cloud market share climbing to nearly 15%, taking share directly from Amazon Web Services. This acceleration is evidence that Alphabet’s AI investments are successfully translating into high-growth enterprise contracts.
Looking ahead, traders should be positioned for further updates at the upcoming developer conference. Given the CEO’s confidence in the Gemini App, we could see further product integrations that act as the next catalyst for the stock. Longer-dated call options could be a prudent way to maintain exposure to this unfolding AI narrative through the summer.
