Google’s recent growth in cloud computing highlights its evolving AI strategy as it gains traction among global enterprises, narrowing the gap between itself and cloud leaders Amazon Web Services (AWS) and Microsoft Azure. Alphabet’s Google Cloud reported a substantial 35% increase in revenue for the July-September quarter, exceeding analysts’ predictions and marking the fastest growth in over two years. The rise positions Google Cloud as a serious contender in a competitive market increasingly driven by AI technology.
Following the announcement, Alphabet shares jumped by 5.5% in premarket trading, underscoring investor confidence in the company’s cloud trajectory. While Google Cloud accounts for a smaller portion of Alphabet’s overall sales (13%) compared to the cloud revenues of Amazon and Microsoft, analysts view this growth as a promising indicator. Angelo Zino, senior equity analyst at CFRA Research, noted, “When you see Microsoft and Amazon report this week, Google is probably going to have the most impressive cloud growth numbers out there.” The growth momentum is driven by Google’s integration of AI features and its infrastructure expansion to meet rising demand.
In the cloud sector, Google competes against AWS and Azure, both of which have extensive AI capacities and global data center footprints. Amazon’s AWS leads the market, contributing 18% to Amazon’s total sales in the previous quarter, while Microsoft's Intelligent Cloud, which houses Azure, accounted for 44% of Microsoft’s revenue. However, Google’s ongoing advancements, including custom AI chips like its Tensor Processing Units (TPUs) and robust cybersecurity features, are increasingly attractive to customers seeking efficient, AI-driven solutions.
Bob O'Donnell, president and chief analyst at TECHnalysis Research, stated that Google’s cloud growth “clearly reflects the company's capabilities in AI being recognized as a key driver in organizations choosing to work with Google.” Part of Google’s success is due to its generative AI platform, Gemini, which has integrated services such as AI-based code generation, data analysis, and cybersecurity intelligence. These offerings allow enterprises to customize and scale their AI operations while benefiting from Google’s expertise, setting it apart from its competitors.
Additionally, Alphabet has expanded its cloud infrastructure with data centers worldwide and committed to significant future investments. The company’s new Chief Financial Officer, Anat Ashkenazi, signaled Alphabet’s plans to increase capital expenditure in 2025, with a portion of the budget likely earmarked for cloud and AI infrastructure expansion.
Charles Rogers, an analyst at M Science, noted that Google Cloud’s focus on security and proprietary technologies has strengthened its differentiation strategy. In line with these efforts, Google’s Vertex AI platform enables customers to harness pre-built Google models while developing their own, providing a versatile toolkit for businesses venturing into AI. As AI-driven technology becomes a crucial differentiator for enterprises, Google Cloud's tailored solutions are helping it win market share in areas where AWS and Azure have traditionally dominated.
Gil Luria, head of technology research at D.A. Davidson, emphasized the importance of this growth, stating, “The Google Cloud business significantly exceeded expectations with meaningful acceleration and margin expansion.”
(Source:www.investing.com)
Following the announcement, Alphabet shares jumped by 5.5% in premarket trading, underscoring investor confidence in the company’s cloud trajectory. While Google Cloud accounts for a smaller portion of Alphabet’s overall sales (13%) compared to the cloud revenues of Amazon and Microsoft, analysts view this growth as a promising indicator. Angelo Zino, senior equity analyst at CFRA Research, noted, “When you see Microsoft and Amazon report this week, Google is probably going to have the most impressive cloud growth numbers out there.” The growth momentum is driven by Google’s integration of AI features and its infrastructure expansion to meet rising demand.
In the cloud sector, Google competes against AWS and Azure, both of which have extensive AI capacities and global data center footprints. Amazon’s AWS leads the market, contributing 18% to Amazon’s total sales in the previous quarter, while Microsoft's Intelligent Cloud, which houses Azure, accounted for 44% of Microsoft’s revenue. However, Google’s ongoing advancements, including custom AI chips like its Tensor Processing Units (TPUs) and robust cybersecurity features, are increasingly attractive to customers seeking efficient, AI-driven solutions.
Bob O'Donnell, president and chief analyst at TECHnalysis Research, stated that Google’s cloud growth “clearly reflects the company's capabilities in AI being recognized as a key driver in organizations choosing to work with Google.” Part of Google’s success is due to its generative AI platform, Gemini, which has integrated services such as AI-based code generation, data analysis, and cybersecurity intelligence. These offerings allow enterprises to customize and scale their AI operations while benefiting from Google’s expertise, setting it apart from its competitors.
Additionally, Alphabet has expanded its cloud infrastructure with data centers worldwide and committed to significant future investments. The company’s new Chief Financial Officer, Anat Ashkenazi, signaled Alphabet’s plans to increase capital expenditure in 2025, with a portion of the budget likely earmarked for cloud and AI infrastructure expansion.
Charles Rogers, an analyst at M Science, noted that Google Cloud’s focus on security and proprietary technologies has strengthened its differentiation strategy. In line with these efforts, Google’s Vertex AI platform enables customers to harness pre-built Google models while developing their own, providing a versatile toolkit for businesses venturing into AI. As AI-driven technology becomes a crucial differentiator for enterprises, Google Cloud's tailored solutions are helping it win market share in areas where AWS and Azure have traditionally dominated.
Gil Luria, head of technology research at D.A. Davidson, emphasized the importance of this growth, stating, “The Google Cloud business significantly exceeded expectations with meaningful acceleration and margin expansion.”
(Source:www.investing.com)