Dive Brief:
- Google Cloud revenues surged, increasing 35% year over year to $11.4 billion, driven by growth across AI infrastructure, generative AI solutions and core products, Google CFO and SVP Anat Ashkenazi said Tuesday, during the company's Q3 2024 earnings call.
- The hyperscaler has seen revenue growth steadily accelerate over the last year, from 22% in Q3 2023 to 28% and 29% in the first two quarters of 2024, respectively.
- Increased enterprise consumption of Google’s cloud database service in combination with the Vertex AI model customization platform fueled the growth spurt, Google CEO Sundar Pichai said. BigQuery machine learning operations increased 80% over the last two quarters, according to Pichai.
Dive Insight:
Cloud revenue growth has dovetailed with massive investments in data center infrastructure to build out capacity.
Google spent $13 billion on capital investments during the three-month period ending Sept. 30, which is 63% more than the $8 billion the company spent in Q3 2023. Since the start of the year, the company has poured $38 billion into infrastructure buildouts, an 80% increase compared to the same period last year.
Ashkenazi broke down Q3 spending into two categories: technical infrastructure, which accounted for the majority of the $13 billion, and facilities. The first and largest of those buckets encompasses AI-optimized chips and servers, as well as data center and networking equipment.
“Innovation in AI requires global reach, which we have through our products and platforms, as well as continued meaningful capital investment,” said Ashkenazi, who joined Google and Alphabet in June, when the company’s former CFO Ruth Porat commenced her new role as president and chief investment officer.
Google remains the smallest of the big three hyperscalers, with roughly 12% of the market. AWS, the leading provider, commands 32% of the cloud market and Microsoft has a 23% share, according to the latest Synergy Research Group analysis. All three companies have invested tens of billions of dollars in infrastructure buildouts this year.
Ashkenazi said she expects capital investments to increase next year. But the company is also looking for ways to optimize spending.
“We’re working to balance our investments in AI and other growth areas with the cost discipline needed to fund those activities,” she said.
