In today’s Cloud Wars Minute, I examine the expectations Sundar Pichai revealed on Alphabet’s April 25 earnings call.
Highlights
00:23 — On Google Cloud’s April 25 earnings call, Sundar Pichai said that he expects Google Cloud and YouTube Ads “will exit 2024 with a combined annual revenue run rate of $100 billion.” It means in Q4, those two units, Google Cloud and YouTube Ads, will combine for $25 billion in revenue.
01:34 — They’d each have to grow 36% in Q4 to get to $12.5 billion each. Now it’s possible that YouTube Ads is going to explode and take the lion’s share of that growth and that Google Cloud won’t be caught up in this. But nothing in the earnings call hinted at that.
02:02 — Google Cloud’s growth has been on the upswing. But 36% is a very big number. Google Cloud’s incredible array of technologies and capabilities in AI could give them the push that’s needed to achieve that figure.
03:17 — In Q1 of this year, YouTube’s revenue dropped. So, based on the most recent numbers, Google Cloud is going to have to do the heavy lifting. The other scenario is that YouTube Ads is going to just have a blowout Q2, Q3, and Q4. But either way, let’s say that Google Cloud is only expected to come in at 30% — that’s still an astonishing rate.
04:36 — Last thing I want to say is that Pichai, generally in any public commentary, is extremely conservative about anything having to do with growth. It’ll be fun to see how this unfolds over the rest of the year, but, clearly, he’s got big plans.
