Google Cloud posts record growth as AI demand lifts all three major providers

The three biggest cloud infrastructure companies all beat Wall Street expectations in their latest earnings reports, but Google Cloud stole the show with its fastest expansion ever. Revenue jumped 63% to $20.03 billion, far exceeding the $18.05 billion analysts had predicted. For context, that’s the highest growth rate since Google began breaking out cloud numbers in 2020.

Alphabet CEO Sundar Pichai told analysts that enterprise AI solutions have become the primary growth engine for Google Cloud for the first time. Revenue from products built with Google’s generative AI models surged 800%, while its custom tensor processing units are gaining traction as alternatives to Nvidia’s chips.

Market leader Amazon Web Services posted a 28% revenue increase to $37.6 billion, nearly $1 billion above consensus. CEO Andy Jassy noted that spending on Bedrock, AWS’s service for building AI agents, jumped 170% from the prior quarter. Microsoft Azure grew 40%, topping estimates, with CEO Satya Nadella reporting that the number of customers using Anthropic and OpenAI models through Azure doubled quarter over quarter.

Overall cloud infrastructure spending hit $129 billion in the period, according to Synergy Research analyst John Dinsdale, who called it “some quarter.” He expects sustained growth as AI unlocks new use cases. But the expansion comes at a cost: the three companies collectively plan nearly $600 billion in capital expenditures this year. Meanwhile, smaller “neocloud” providers like CoreWeave now hold 5% of the market.

Source: CNBC