Google's AI Investments Pay Off as Cloud Revenue Surges

Key points

• Google Cloud revenue hit $24.8 billion last quarter, up 82% from the same period a year ago.
• That figure beat Wall Street's $22.46 billion forecast by a clear margin.
• Alphabet's total revenue grew 24% year-over-year to $119.8 billion.
• CEO Sundar Pichai cited AI-driven momentum across the whole business during Wednesday's earnings call.
• Gemini, Google's AI chatbot, now has 950 million monthly active users, up from 750 million in Q4 2025.

Alphabet investors had been openly fretting that the company's AI spending was too rich to justify. Last quarter's results make that case harder to argue.

Google Cloud revenue rose 82% year-over-year to $24.8 billion, as first reported by TechCrunch. That beats both last quarter's 63% growth (which produced $20 billion in revenue) and the $22.46 billion analysts expected. The driver, according to Alphabet, was rising corporate demand for AI tools and infrastructure. The company's unearned cloud contract backlog, meaning signed deals not yet billed, climbed to $514 billion.

Alphabet posted $119.8 billion in revenue, up 24%, with Google Services contributing $94.5 billion, a 15% rise. Profit reached $112.1 billion, against $28.1 billion in the same quarter last year.

"Our AI investments are redefining what's possible across every part of our business," Pichai said during Wednesday's call. "We have exciting momentum across the board."

Gemini's user count reinforces that claim. Google reported 750 million monthly active users in Q4 2025; that number is now 950 million. We covered the chip Google is building specifically to keep Gemini running efficiently in our 22 July story, and the scale of these results suggests that hardware bet is already attracting cloud customers before the silicon ships.

Should users be worried?

For most people, Google's deepening AI push means the apps and services they already use will keep getting smarter. That comes with a real trade-off worth knowing about: the more AI does for you, the more data Google collects to make it work. It's worth checking your Google account's privacy settings and deciding which features earn that access.

Capital expenditure, the money Alphabet spends on data centres, chips and infrastructure, is forecast at $180 billion to $190 billion for the year. Analysts pressed Pichai on returns during Wednesday's call. His answer pointed to 2027: "We are seeing strong demand indicators, including long-term deals. The dynamics look healthier than where we were about a year ago, so that's what gives us the confidence to undertake those investments."

The honest read on this quarter is that the cloud numbers are genuinely strong, not just seasonally good. Alphabet has now posted twelve consecutive quarters of double-digit revenue growth, and this one sits at the top of that streak. The question worth watching isn't whether the AI spend is paying off now; it's whether the $180-to-$190 billion capex commitment delivers the same growth rate when 2027 arrives.