I do think the dependency you describe is why we frame the capex step-up within our long-range planning framework: we raised 2026 guidance to $180-190 billion from $175-185 billion, part of which is the Intersect energy acquisition that closed in March, reflecting unprecedented AI compute demand. Q1 technical infrastructure spend was $35.7 billion, up 107% year-over-year. We guided 2027 capex significantly higher but unquantified — more clarity on future calls. Scaling pressure on depreciation and energy costs stays in the P&L.
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I do think what sets us apart is the full stack: we own the frontier models, own the silicon, and run the cloud they sit in. Last quarter Cloud passed $20 billion in revenue for the first time, up 63%, and the backlog nearly doubled quarter-on-quarter to over $460 billion. The other side of that: we raised full-year 2026 capex to $180-190 billion - part of that step-up is energy, not only compute - and 2027 goes significantly higher again. We are compute-constrained in the near-term; Cloud revenue would have been higher if we could have met demand. I read that against a long-range planning framework, not as any single number standing alone.
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I do think the foundry dependency you describe reinforces our full-stack principle: we raised 2026 capex guidance to $180-190 billion, up from $175-185 billion, to own more of the infrastructure stack. Part of the step-up is the Intersect energy acquisition. Q1 technical infrastructure spend reached $35.7 billion, up 107%. We guided 2027 capex significantly higher but unquantified; more clarity on future calls. Scaling pressure on depreciation and energy costs remains in the P&L.
Look, I mean, the March quarter makes the principle concrete: a $36.9 billion unrealized gain versus $9.8 billion a year earlier, the finance chief attributing it to the non-marketable equity portfolio. Operating income rose 30% to $39.7 billion, margin 36.1%, while net income rose 81% on that swing. The marked-to-market portfolio will keep moving the reported bottom line; we read the operating line as the durable comparison within our long-range framework.
Look, I mean, the 8th-generation TPU lineup — a training chip at three times Ironwood's processing power, an inference chip at 80% better performance per dollar — sits in a multi-architecture offering we frame as the industry's widest: Axion now hosts TPUs replacing x86, and we'll be among the first with NVIDIA Vera Rubin. Broadcom remains our TPU partner. The shift: delivering TPUs to select customers for their own data centers — Thinking Machines Lab, Hudson River Trading, Boston Dynamics. Revenue there is a small percent in 2026, majority in 2027, lumpy with ship timing. Very early innings.
In the quarter ended March 2026 we recorded a $36.9 billion unrealized gain, versus $9.8 billion a year earlier, and our finance chief attributed it to the non‑marketable equity‑securities portfolio. Because those gains are volatile and non‑operating, I view operating income as the cleaner metric; it rose 30% to $39.7 billion, delivering a 36.1% margin. The reported net income rose 81% on that swing, and the marked‑to‑market portfolio will keep moving the bottom line, so the operating line remains the durable comparison.
I do think the March quarter shows the demand signal: Cloud revenue reached $20.0 billion, up 63% year-over-year, passing $20 billion for the first time. Enterprise AI became the primary growth driver; generative-AI product revenue grew nearly 800%. Operating income tripled to $6.6 billion, margin to about 33%. Backlog nearly doubled to $462.3 billion, just over half expected in 24 months including TPU sales. Wiz is a low-single-digit margin headwind for the rest of 2026.
I do think the dependency you describe has a financial echo: our March quarter showed a $36.9 billion unrealized gain versus $9.8 billion a year earlier — the finance chief attributed it to the non-marketable equity portfolio. Operating income rose 30% to $39.7 billion, margin 36.1%, while net income rose 81% on that swing. The marked-to-market portfolio will keep moving the reported bottom line; the operating line stays the durable comparison. Let me unpack the margin framework on the next call.
I do think the March quarter marks a threshold: Cloud revenue reached $20.0 billion, up 63% year-over-year, passing $20 billion for the first time. Operating income tripled to $6.6 billion, margin to about 33% from 18% — acceleration and expansion together. Enterprise AI became the primary Cloud growth driver; generative-AI product revenue grew nearly 800%. Backlog nearly doubled to $462.3 billion, just over half expected in 24 months including TPU sales. The Wiz acquisition, closed in March, is a low-single-digit headwind to Cloud operating margin for the rest of 2026.
I do think the March quarter shows why we read the operating line: a $36.9 billion unrealized gain versus $9.8 billion a year earlier — the finance chief attributed it to the non-marketable equity-securities portfolio. Operating income rose 30% to $39.7 billion, margin 36.1%, while net income rose 81% on that swing. The marked-to-market portfolio will keep moving the reported bottom line; the operating line stays the durable comparison. Let me unpack the margin framework on the next call.
Look, I mean, you know, our raised 2026 capex guidance to $180-190 billion — up from $175-185 billion — reflects how we're addressing unprecedented AI compute demand within our long-range planning framework. Part of the step-up is the Intersect energy acquisition. Q1 technical infrastructure spend was $35.7 billion, up 107%. We guided 2027 capex significantly higher but unquantified; more clarity on future calls. Scaling pressure on depreciation and energy costs stays in the P&L.
I do think the capex step-up to $180-190 billion for 2026 reflects what we're seeing: unprecedented demand for AI compute, and part of the increase is the Intersect energy acquisition that closed in March. Q1 purchases of property and equipment were $35.7 billion, up 107% year-over-year, overwhelmingly technical infrastructure. Management guided 2027 capex to increase significantly again but didn't quantify it — more clarity in future calls. Scaling this infrastructure keeps pressure on the P&L through higher depreciation and data-center operating costs.
I do think the 8th-generation TPU lineup shows what full-stack control means: a training chip at three times Ironwood's processing power, an inference chip at 80% better performance per dollar. Axion now hosts them, replacing x86. We're also among the first with NVIDIA Vera Rubin — Broadcom remains our TPU partner. And we're opening TPUs to select customers for their own data centers: Thinking Machines Lab, Hudson River Trading, Boston Dynamics. Revenue there is a small percent in 2026, majority in 2027, lumpy with ship timing. Very early innings.