GoKawiilAll three top cloud infrastructure providers surpassed analyst estimates in earnings reports late Wednesday, but Google was the standout, generating its fastest growth rate on record.
Google is chasing Amazon Web Services and Microsoft Azure in the public cloud market, which is booming as demand soars for access to artificial intelligence models and services. All three vendors provide a suite of tools for building and running companies' products, and they also offer an array of their own AI models and specialized hardware.
"Wow, that was some quarter," Synergy Research analyst John Dinsdale said in an email after the results were released. His firm estimated that cloud infrastructure spending reached $129 billion in the period.
"Our forecasts point to sustained strong growth in the years ahead, with AI continuing to drive usage, unlock new use cases, and boost cloud provider revenues," Dinsdale said in Synergy's update.
Google Cloud, which includes infrastructure and corporate productivity apps, saw revenue shoot up 63% to $20.03 billion, surpassing StreetAccount's consensus of $18.05 billion. That's by far the strongest rate of growth for any period since Google started breaking out cloud results in 2020.
In addition to offering a full infrastructure suite for AI workloads, Google is firmly competing with OpenAI and Anthropic in the market for AI models, as Gemini continues to gain adoption. The company is also seeing accelerating growth from its homegrown tensor processing units (TPUs), which are emerging as an alternative to Nvidia's graphics processing units (GPUs).
"Our enterprise AI solutions have become our primary growth driver for cloud for the first time," Alphabet CEO Sundar Pichai said on that company's Wednesday webcast with analysts. Revenue from products built with Google generative AI models grew 800%, Pichai said.