Wall Street closes at a record for the first time since end of January
The primary catalyst driving Alphabet’s strong 3.2% performance today centered on developments in its artificial intelligence infrastructure business, specifically its growing commercial relationship with Anthropic. Alphabet has significantly expanded its partnership with AI developer Anthropic, guaranteeing the startup access to a massive 3.5 gigawatts of computing power from Alphabet’s proprietary Tensor Processing Units starting in 2027. This multi-gigawatt deal represents a transformative shift for Alphabet, moving beyond internal use of its custom chips to selling them as a commercial product. Analysts at Morgan Stanley estimate that selling 500,000 of these specialized chips could generate approximately $13 billion in revenue and contribute around $0.40 to earnings per share, building upon a prior commitment from Anthropic to purchase $21 billion worth of TPUs for 2026.
The timing of this announcement proved particularly powerful given Anthropic’s explosive growth trajectory. Anthropic closed February 2026 with $9 billion in annualized revenue, and more than tripled its revenue run rate to $30 billion in roughly four months. This unprecedented growth validates the commercial viability of AI infrastructure spending and positions Alphabet as a critical enabler of the AI economy. Alphabet has established itself as an AI leader, being the only company with both a top-tier foundation AI model and its own top-notch AI chips, with proprietary chips giving it a significant structural cost advantage.
Supporting factors included positive analyst sentiment ahead of Alphabet’s April 29 earnings report. Google Cloud’s growth rate likely holds the key to Alphabet’s stock performance, with last quarter’s Google Cloud delivering jaw-dropping revenue growth of 48%, and if this growth rate meaningfully accelerates, the stock could easily rocket higher. The prospect of accelerating cloud revenue from TPU sales adds another dimension to the upcoming earnings narrative.
The broader market context also supported today’s gains. The S&P 500 Index staged a strong comeback, turning positive for 2026 on Monday and recovering all losses from the U.S.-Iran war, as investors reacted to earnings reports and a possible resumption of peace talks with Iran. Technology stocks led the advance, with risk appetite returning as geopolitical tensions showed signs of de-escalating.
These factors combined to create a powerful bullish narrative for Alphabet today. The Anthropic partnership validates Alphabet’s multi-year investment in custom AI chips while opening a substantial new revenue stream precisely as the company approaches a critical earnings report. Against a backdrop of improving market sentiment and sector rotation back into technology, Alphabet emerged as a standout performer, with investors recognizing the strategic value of its position as both an AI model developer and infrastructure provider.
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