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Google Cloud is killing it
Alphabet's Google Cloud division has posted a dramatic surge in earnings, with the company now describing it as the group's fastest-growing business. The unit, once seen as a distant third-place player behind Amazon Web Services and Microsoft Azure, has become a major driver of Alphabet's overall performance, contributing more than a fifth of both revenue and operating profit for the quarter.
According to Alphabet's second-quarter results, published on Wednesday, Google Cloud revenue rose 82 per cent year-on-year, from $13.6 billion to $24.8 billion, while operating income more than tripled, climbing from $2.8 billion to $8.8 billion. The division now accounts for 21 per cent of Alphabet's revenues and 22 per cent of its operating income. Google attributes the growth to demand for AI infrastructure and services, though The Register notes this is hard to verify given the division's broader range of offerings, and suggests aggressive marketing of its Gemini AI model may also be a factor, even as rivals such as Anthropic's Claude remain many enterprises' preferred model.
In short
- Google Cloud revenue jumped 82% year-on-year to $24.8 billion
- Operating income more than tripled to $8.8 billion
- Division now makes up over a fifth of Alphabet's revenue and profit
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Google Cloud's growth figures represent genuine market success and a strategic competitive breakthrough. The 82% revenue growth combined with tripled operating profitability demonstrates the company has moved beyond subsidising market share to building a genuinely profitable business. This transformation reflects real enterprise demand for cloud computing and AI infrastructure, validating Google's strategy and showing it can compete effectively against established leaders AWS and Azure.
The case against
Whilst the headline growth figures are striking, they warrant scrutiny regarding their quality and durability. Google Cloud's diverse service portfolio makes it difficult to isolate how much growth stems from genuine AI demand rather than aggressive marketing bundling strategies around Gemini. The fact that many enterprises continue to prefer competing AI models suggests Google's product leadership may not match its marketing narrative, raising legitimate questions about whether this growth trajectory will prove sustainable.
Explained simply
Google Cloud is the cloud computing division of Alphabet, Google's parent company. Cloud computing allows businesses to use computing power, storage and software online instead of owning and maintaining their own servers, and it has become essential to how modern organisations operate.
For most of its existence, Google Cloud has been a distant third in the market behind Amazon Web Services and Microsoft Azure. These two competitors have dominated the business for years, leaving Google with a relatively minor share of an industry worth billions of pounds annually.
Recent financial results show Google Cloud growing rapidly as more companies become customers. This matters because cloud services generate steady, predictable income and substantial profits, making it one of the most valuable business segments in the technology industry.