Alphabet’s cloud surge gives investors a clearer AI payback signal
Google Cloud revenue jumped 82% to $24.8 billion, giving Alphabet a stronger answer to questions about its AI spending.
By Jordan Bell · Startups & Deals Reporter
· 3 min read
Alphabet’s latest quarter gave investors a cleaner read on whether its AI spending is turning into real business: Google Cloud revenue rose 82% from a year earlier to $24.8 billion, according to the company’s earnings report. For everyday investors tracking Big Tech’s AI race, the key signal is that customers are paying Google for AI tools and the cloud infrastructure needed to run them.
The cloud result topped the $22.46 billion Wall Street analysts expected, according to Bloomberg. It also accelerated from the prior quarter, when Google Cloud revenue grew 63% year over year to $20 billion.
Alphabet said the gains came largely from companies adopting its enterprise AI products and AI infrastructure. In plain English, that means businesses are using Google’s software and renting computing power from Google to train, build or run AI systems, rather than buying and managing all the hardware themselves.
The company also reported a cloud backlog of $514 billion. Backlog means contracted work that has not yet been recognized as revenue, so it is not cash already counted in the quarter. It does, however, give investors a view into demand Alphabet says is already committed under cloud contracts.
AI spending remains the central question
Alphabet’s overall revenue rose 24% year over year to $119.8 billion, according to the earnings report. The company reported profit of $112.1 billion, up from $28.1 billion in the year-earlier period. Google Services, the segment that includes core businesses such as search and related consumer products, increased 15% to $94.5 billion.
Chief Executive Sundar Pichai tied the quarter’s performance to the company’s AI push during Wednesday’s earnings call. “Our AI investments are redefining what’s possible across every part of our business,” Pichai said. “We have exciting momentum across the board.”
Alphabet also said Gemini, Google’s AI chatbot app, now has 950 million monthly active users. The company previously reported 750 million monthly active users for Gemini in the fourth quarter of 2025.
Strong revenue growth is not new for Alphabet. The company has now posted 12 straight quarters of double-digit revenue growth. The cloud acceleration stands out because it connects directly to the same AI investment cycle that has made some investors uneasy.
The bill is still large
Alphabet’s capital expenditures are expected to be between $180 billion and $190 billion for the year. Capital expenditures, often shortened to capex, are long-term investments in assets such as data centers, chips and computing infrastructure.
Analysts pressed Pichai on the earnings call about when those investments will show a return and how large the payoff could be. “I think our compute capacity investments in ’27,” Pichai said, adding that the company is seeing “strong demand indicators, including long-term deals.”
Pichai said the demand picture looks healthier than it did about a year ago, which he said gives Alphabet confidence to make those investments. For investors, the quarter does not end the debate over AI spending, but it gives Alphabet a firmer revenue story behind the buildout.
This story draws on original reporting from TechCrunch.
