Dive Brief:
- Google Cloud hit several financial and adoption milestones in the past three months, driven, in part, by the tech company’s commitment to AI, Alphabet CEO Sundar Pichai said during an earnings call Tuesday.
- Quarterly revenues for cloud surpassed $10 billion for the first time and operating profit topped $1 billion for Q2 2024, which ended June 30. Cloud represented around 12% of Alphabet’s total revenue.
- “Year-to-date, our AI infrastructure and generative AI solutions for cloud customers have already generated billions in revenues and are being used by more than 2 million developers,” Pichai said during the call.
Dive Insight:
Since first turning a profit in April 2023, Google Cloud continues to grow its revenue quarter after quarter, increasing investments along the way.
The hyperscaler announced several multimillion-dollar data center expansion projects around the U.S. in the last three months. Google released its sixth generation custom AI accelerator tensor processing unit in May.
Google Cloud’s hyperscaler counterparts have made significant investments as well. Microsoft has pledged billions to expand its Azure empire globally. AWS, the largest cloud provider, has poured more than $50 billion into its infrastructure complexes in the first half of the year.
Developing better chips and models carries a hefty price tag, too.
“When we go through a curve like this, the risk of under-investing is dramatically greater than the risk of over-investing for us,” Pichai said during the earnings call. Even in scenarios where it turns out that Google has over-invested, Pichai said technology infrastructure has a long useful life and a wide range of applications.
Google sees its generative AI efforts as an extended play. Despite the number of developers and companies that use generative AI already, the technology’s benefits to operations aren’t automatic.
“We are in this phase where we have to deeply work and make sure on these use cases, on these workflows, we are driving deeper progress and unlocking value, which I’m very bullish will happen,” Pichai said. “But these things take time.”
Enterprise leaders are finding generative AI’s ROI can be elusive as well.
