With its quarterly growth rate accelerating even as Q2 revenue surpassed $10 billion, Google Cloud continues to be the world’s fastest-growing major cloud provider as AI infrastructure and GenAI solutions are adding billions of dollars in revenue.
Now on a $41-billion run rate that Alphabet CEO Sundar Pichai has hinted will soar to $50 billion in Q4, Google Cloud said Q2 revenue jumped 29% to $10.35 billion, and delivered an operating profit of $1.17 billion.
I believe the Q2 performance by Thomas Kurian’s company is even more impressive when we consider that in Q1, revenue grew 28%. That means Google Cloud is achieving an incredibly difficult feat: As its revenue continues to get larger, its rate of growth is going up.
Look at Google Cloud’s annual revenue and rate of growth since Kurian became CEO in 2019:
- 2019: $8.92 billion (growth rate unavailable)
- 2020: $13.06 billion, up 46.4%
- 2021: $19.2 billion, up 47%
- 2022: $26.3 billion, up 37%
- 2023: $33.1 billion, up 25.9%
- 2024 my estimate: $44.0 billion, up 32.9% my estimate
One of the primary reasons for why I’m anticipating the growth rate to accelerate here in 2024 is the brilliant execution that Kurian and his team have delivered in fusing their fast-growth cloud business with their very fast-growth AI business.
On the Alphabet Q2 earnings call this week, CEO Pichai said that in just the first six months of this year, “our AI infrastructure and generative AI solutions for cloud customers have already generated billions in revenues and are being used by more than two million developers.”
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In his opening remarks on the call, Pichai explained how Google overall and Google Cloud in particular have been able to achieve their best-in-class growth, and I’ll get to that in a moment. But first I want to note that Pichai also specifically called out how his company’s multi-cloud partnership with Oracle — a company that for many years has been an archrival — has “significantly expanded our joint offerings to their large customer base.”
That’s yet another example of how leadership in the Cloud Wars of today goes far beyond technological brilliance, and requires simultaneous relentless innovation in strategic alliances and go-to-market approaches. (For more on that, please see “Google Cloud Database Chief Andi Gutmans: 10 Customer Benefits from Oracle Multi-Cloud Deal” and “Oracle Q4 Blowout + Google Cloud Multi-Cloud Deal: Dazzling!“.)
Here’s how Pichai, during the earnings call, opened his explanation for his company’s outstanding performance. “Our momentum begins with our AI infrastructure, which provides AI start-ups like Essential AI with leading cost-performance for models and high-performance computing applications,” Pichai said.
“We continue to drive fundamental differentiation with new advances since Cloud Next. This includes Trillium, which I mentioned earlier, an A3 Mega powered by NVIDIA H100 GPUs, which doubles the networking bandwidth of A3. Our enterprise AI platform, Vertex, helps customers such as Deutsche Bank, Kingfisher, and the U.S. Air Force build powerful AI agents.”
Final Thought
Bear in mind that it was only a couple of years ago when some self-proclaimed experts declared that Alphabet was about to shut down Google Cloud because, at that time, it had not yet become profitable. I suspect those were the same geniuses who, back in mid-2020, were calling for SAP to fire newly appointed Christian Klein.
Those are just two more reasons why, here in the fast-changing Cloud Wars, we all need to be leery of self-proclaimed “experts” more interested in gaining some attention than in analyzing what’s really going on.
