Alphabet, the parent company of Google, reported a remarkable 35% increase in Google Cloud revenue for the July-September quarter, marking its fastest growth rate in eight quarters. This surge has led to a 5.5% rise in the company’s stock, exceeding analysts’ expectations of a 29% increase, according to LSEG. In addition to cloud growth, Alphabet’s core advertising sales also rose by 10%.
Angelo Zino, a senior equity analyst at CFRA Research, remarked, “When Microsoft and Amazon report this week, Google is likely to showcase the strongest cloud growth numbers among the three.” Although Google Cloud is smaller than its competitors, it accounted for 13% of Alphabet’s total third-quarter sales, an increase from 11% a year earlier. In contrast, Amazon’s AWS contributed 18% to its revenue in the previous quarter, while Microsoft’s Intelligent Cloud segment, which includes Azure, made up 44%.
Bob O’Donnell, president and chief analyst at TECHnalysis Research, noted that the ongoing growth of Google Cloud reflects the increasing recognition of the company’s AI capabilities as a key factor in attracting organizations. This growth marks the fourth consecutive quarter of acceleration for Google Cloud, which had previously faced a slowdown attributed to “customer optimization efforts.”
While Google Cloud currently lags behind its competitors in AI capacity, its focus on powerful Tensor Processing Units—custom AI chips—and enhanced security features have helped differentiate it from Azure and AWS, according to M Science analyst Charles Rogers. Like its rivals, Alphabet is heavily investing in AI, enhancing its Search business to compete with Microsoft-backed OpenAI, and committing billions to expand its cloud infrastructure with new data centers worldwide.
Google has also integrated its generative AI chatbot, Gemini, into its cloud offerings, providing features such as AI-driven code generation and insights into cybersecurity threats. These investments have led to increased customer spending on its AI services, including the Vertex AI platform.
Alphabet’s new CFO, Anat Ashkenazi, stated that the company’s capital expenditures in 2025 are expected to exceed those of this year. Gil Luria, head of technology research at D.A. Davidson, commented, “Google Cloud significantly surpassed expectations with notable acceleration and margin expansion, marking a key area where the company has effectively converted its AI capabilities into revenue growth.”
Credit: Reuters (Text Excluding Headline)
