Google Cloud's $58 Billion Revenue Surge: A Glimpse into Tech's Future

Alphabet's Google Cloud has announced a forecasted $58 billion in new revenue over the next two years. This move underscores the importance of Google's cloud division as a pivotal component of the tech giant's future growth strategy.

With the cloud division already exceeding a $50 billion annual revenue rate, its backlog of non-recognized sales contracts is expanding rapidly, according to unit chief Thomas Kurian at the Goldman Sachs Communacopia + Technology conference. About 55% of this $106 billion backlog is expected to convert into revenues within two years, excluding potential new contracts. Kurian highlighted a 28% quarter-over-quarter increase in new customers, with major AI labs now counted among its clientele, including ChatGPT maker OpenAI and Anthropic.

Though cloud computing comprises just 14% of Alphabet's revenue, it remains one of its most rapidly expanding business sectors. Google Cloud's rise parallels the tech industry's bid to meet Wall Street's high expectations for AI investments. Simultaneously, Alphabet's core search business seeks to leverage AI while contending with regulatory hurdles in Europe and the U.S. In July, Alphabet CEO Sundar Pichai announced an increase in capital expenditure plans for 2025 to $85 billion, a decision driven largely by strong cloud demand.

(With inputs from agencies.)