Google Cloud Revenue Hits $24.8 Billion Fueled by AI Investment

Google Cloud's $24.8 billion in revenue marks a significant milestone for Alphabet, surpassing analyst forecasts and previous quarter growth. This substantial jump is largely attributed to the increasing demand for artificial intelligence infrastructure and solutions for businesses.

Alphabet's earnings report, for Google's parent company, highlighted that most cloud contracts stemmed directly from AI implementation. The value of unbilled work in the cloud segment has already climbed to an impressive $514 billion.

Sundar Pichai, Google's CEO, emphasized the transformative impact of AI across the company during the earnings presentation.

Our investments in AI are redefining what's possible across every part of our business. We have positive momentum across the board.

Pichai stated this, as reported by Reuters.

Alphabet's ambitious investments in technological infrastructure are projected to reach up to $205 billion by 2026, according to its updated forecasts. Concurrently, Gemini, Google's AI chatbot, demonstrated remarkable growth, reaching 950 million monthly active users. This represents a significant increase from the 750 million users reported in the last quarter of 2025.

Overall, Alphabet's results showed a 24% year-over-year growth in total revenue, reaching $119.8 billion. The company's net profit surged to $112.1 billion, a substantial improvement compared to the $28.1 billion recorded in the same period last year.

Google's services business, which includes advertising and other digital products, contributed $94.5 billion, a 15% increase from the prior year. However, the company reported negative free cash flow for the first time in its history, with a burn of $5.9 billion during the quarter, and an adjusted earnings per share of $2.85, slightly below Wall Street's expectations.

This increase in capital expenditure, coupled with the negative cash flow, raised concerns among investors, causing Alphabet's stock price to drop by 3% in after-hours trading. CFO Anat Ashkenazi explained to analysts that “demand still exceeds our investment,” attributing the rise to faster delivery of technological capacity.

Despite cloud advancements and Gemini's success, Google faces challenges in leading AI model development. The launch of Gemini 3.5 Pro experienced delays, allowing competitors like Anthropic and OpenAI to solidify their positions in the enterprise coding tools market.

Sundar Pichai acknowledged that “there are areas where we need to improve; coding and developing intelligent agents is one example.” The company has already begun training the next version, Gemini 4, dedicating significant computational resources to this project. Additionally, Google started recognizing revenue from the direct sale of its TPU chips, which compete with Nvidia's offerings, though most of these revenues will be reflected in the next fiscal year.