Welcome to the Cloud Wars Minute — your daily cloud news and commentary show. Each episode provides insights and perspectives around the “reimagination machine” that is the cloud.
In today’s Cloud Wars Minute, I break down Google Cloud’s Q1 results.
Highlights
00:21 — In Q1, Google Cloud had a growth rate of 28%. That’s down from Q4 when it was 30%, which was down from Q3 when it was 35%. That is the result of demand overwhelming data center capacity and supply. But have no fear: Alphabet says we’ve got $75 billion to the rescue to boost that data center capacity.
01:05 — Google Cloud Q1 revenue is up 28% That is now totaling $12.26 billion. If you look at that on an annualized basis, that comes out to about $49.1 billion. Here’s where Google Cloud is making money: its operating income for Q1 went up 142%. A year ago, in Q1, it was $900 million; for Q1 this year, it was $2.18 billion.
02:34 — Three months ago, on its Q4 earnings call, Alphabet mentioned that Google Cloud’s growth rate was constrained because there wasn’t enough data center capacity. Now, Alphabet CFO Anat Ashkenazi said last week in its Q1 earnings call that again, it was this lack of data center capacity that limited Google Cloud’s ability to grow. Therefore, it is pumping this $75 billion in.
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03:10 — Ashkenazi said that because of the nature of the construction of these sorts of facilities, and the supply chain delivery timetables and all that, it probably won’t be until the end of the year when Google Cloud and its customers will start to see the results of this and get some relief from this restrained, constrained situation they’ve got out here around capacity.
04:21 — They certainly don’t want to overbuild. I’m sure they don’t want to underbuild, but of the two choices — overbuild or underbuild — I think right now, playing it cautious a little bit is the way to go. But, the $75 billion should go a long way toward ensuring that, in the future, Google Cloud has got the throughput here to deliver what customers want and need.
