Google Cloud Hypergrowth Triggers More Billions from Alphabet

With revenue soaring and losses plummeting, Google Cloud has convinced parent Alphabet to continue investing billions in the high-flying business that has a higher growth rate than any other company on the Cloud Wars Top 10.

On my weekly Cloud Wars Top 10 rankings, Google Cloud is #3 behind #1 Microsoft and #2 Amazon.

During Alphabet’s Q1 earnings call last week, CFO Ruth Porat said, “As for Google Cloud, our approach to building the business has not changed. We remain focused on revenue growth and we will continue to invest aggressively in products and our go-to-market organization, given the opportunity we see.”

That is precisely what Porat and Alphabet CEO Sundar Pichai have been saying for the past few quarters, and it’s a point Porat reiterated a few times later in the earnings call. Are we seeing a consistent theme here or what?

• “We do remain focused on continuing to invest to build the cloud organization for long-term performance….” 
• “We do intend to continue to invest meaningfully in cloud given the opportunity.” 
• “So, the main takeaway is we’re continuing to invest. We’ll invest aggressively in products and go-to-market….”
• “At this point, we do remain focused on investing to build the organization for long-term performance.”

The ascendancy of Google Cloud within the massive Google/Alphabet empire was also unmistakably evident in the Alphabet press release describing companywide Q1 results. At the very top of that press release, CEO Pichai cited two Google products in particular for their outsized contributions in Q1: one was Search, and the other was Google Cloud, which until about a year ago rarely was even mentioned on the earnings calls and corporate press release.

And immediately after that citation from Pichai in the press release, CFO Porat called out Google Cloud quite pointedly in summarizing Alphabet’s results: “Total revenues of $55.3 billion in the first quarter reflect elevated consumer activity online and broad-based growth in advertiser revenue. We’re very pleased with the ongoing momentum in Google Cloud, with revenues of $4.0 billion in the quarter reflecting strength and opportunity in both GCP and Workspace.”

That Q1 results puts Google Cloud in excellent position to hit the calendar-2021 revenue target of $18 billion that I’m projecting, as described in Cloud Wars Top 10 2021 Revenue to Hit $241 Billion: Microsoft $75B, Amazon $60B, IBM $28B.

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