Alphabet Records Best Quarter Ever, Cloud Grows 63%
Synopsis
Alphabet recorded its biggest cloud quarter, Google Cloud rose 63% in Q1, easily beating estimates and sending shares up more than 6% after hours. Enterprise AI is now, for the first time, Google’s fastest…
Alphabet recorded its biggest cloud quarter, Google Cloud rose 63% in Q1, easily beating estimates and sending shares up more than 6% after hours. Enterprise AI is now, for the first time, Google’s fastest growing cloud driver.
Key Highlights
- Google Cloud reached $20 billion in Q1, up 63%.
- Total revenue at Alphabet increased 22% year-over-year to $109.9 billion.
- Cloud operating profit surged from $2.2 billion to $6.6 billion, roughly tripling in size over the course of a year.
- For 2026, Alphabet lifted its capital spending forecast to a range of $180-190 billion, $5 billion higher than the guidance it gave last quarter.
- For the first time, Google is selling its TPU AI chips directly to customers after years of closely guarding them for in-house use.
Google Rides High With AI-Powered Cloud Quarter October 2023
Alphabet reported $109.9 billion in Q1 revenue on Wednesday, up 22% year over year and above analyst expectations for $107.2 billion. But the star was, Google Cloud, up 63% to $20 billion for its quickest growth rate since Alphabet started breaking out that segment by itself in 2020 and over 12 percentage points faster than analysts had up until then been projecting at only a 50.1%.
In one year, Cloud operating income surged from $2.2 billion to $6.6 billion, an increase of 3 times over. Sundar Pichai also said this was the first time enterprise AI solutions dwarfed all other drivers for cloud as sales on these products have seen 8x growth year-over-year.
Google Is Selling Its AI Chips, a New Major Way to Make Money
For years, Google has reserved its TPU chips (the processors it uses to train and run AI models like Gemini) for internal use only. For the first time, Pichai said Google now sells TPUs directly to some customers, creating a completely new revenue stream for Google that pits it against Nvidia and the vast GPU business. TPU revenue is expected to be minimally recognised in 2026 with the majority converting in 2027, the company said. That left some sign of the enormous pipeline still ahead, as Google Cloud’s backlog almost doubled quarter on quarter to $460 billion, with just over half due to be recognised in the next 24 months.
How Google Compares to AWS and Azure, and Why Investors Like it More Right Now
Google Cloud remains the world’s third-largest cloud provider after Amazon Web Services and Azure. To develop new transparency and incident, AWS climbed 28% in Q1 to $37.6 billion, above forecasts but a long way from what Google is delivering.
Azure also met expectations with a growth rate of 40%. Alphabet jumped over 6% after hours, and Amazon and Microsoft shares slid after their results. Overall net income for Alphabet climbed 81% to $62.6 billion, though $36.9 billion of that stemmed from a gain on equity securities including stakes in SpaceX and Anthropic, both eyeing mammoth IPOs this year.
FAQs
- Q1 Growth of Google Cloud How fast did Google Cloud grow in Q1?
That was only 50.5% in the previous quarter. Earnings growth accelerated to 63%, compared with an analyst estimate of 51%.
- What are Google’s TPU chips?
AI processor Google has been using internally between training and running its AI models for years now For the first time, it has begun selling them directly to cloud customers in competition with Nvidia’s GPUs.
- Why did net income jump 81%?
$36.9 billion is driven by gains on equity securities, partly due to strong operations but also helped by Alphabet's stakes in SpaceX and Anthropic, both on the road to IPOs.
Follow Inspirepreneur Magazine for daily global business news.
At Inspirepreneurs Magazine, covering entrepreneurship, business failures, and the human stories behind the world's most ambitious founders. She writes at the intersection of strategy and storytelling.
