Once considered a loss-making division, Google Cloud has now become one of Alphabet’s fastest-growing businesses, driven by large-scale investments in artificial intelligence, datacenters, custom chips, and networking infrastructure.
Alphabet reported that Google Cloud’s revenue crossed 15 billion dollars in the third quarter, marking a 34 percent increase. The surge was fuelled by growing demand for AI infrastructure and services, including Google’s Gemini model. Google Cloud now rivals YouTube as Alphabet’s second-largest revenue source after search advertising.
“Google Cloud is one of the most important priorities for Alphabet as a whole and I expect it to play an even more central role as the company moves forward,” said Alphabet CEO Sundar Pichai.
Much of Google Cloud’s rise is credited to its chief, Thomas Kurian, who joined from Oracle in 2018. Under his leadership, the unit’s market share grew from 7 percent to 13 percent by 2025, according to industry estimates.
When Pichai took over as CEO in 2019, he identified YouTube and Google Cloud as the key pillars for future growth beyond advertising. YouTube quickly became the world’s largest video platform, while Google Cloud endured heavy losses until it turned profitable in 2023.
Now, with the rise of generative AI, Alphabet is aiming to close the gap with Microsoft and Amazon, which control 20 percent and 30 percent of the cloud market respectively. The growth has come with heavy costs as Alphabet increased its capital spending to expand infrastructure.
“This is the moment Google Cloud was waiting for,” said an analyst from a leading research firm. “A lot of the future growth at Alphabet is being looked at through its potential.”
Kurian introduced a customer-first approach, tightened spending, and expanded operations into lower-cost regions. He also restructured the unit’s sales strategy by industry to improve efficiency. His push for collaboration extended to competitors, making Google’s own chips, called TPUs, available to other AI developers such as Anthropic, Apple, and Safe Superintelligence.
Alphabet’s partnerships and AI focus have significantly strengthened Google Cloud’s technical position. Pichai said Alphabet is “investing in TPU capacity to meet the tremendous demand we are seeing from customers and partners.”
As Alphabet continues to invest heavily in AI and infrastructure, Google Cloud is expected to remain central to the company’s growth strategy.
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