Alphabet, the parent company of Google, delivered stronger-than-expected cloud revenue growth for the quarter ending in June, fueled by soaring demand for cloud computing services as businesses around the world rush to embrace artificial intelligence.
Revenue from Google Cloud climbed 82% to $24.8 billion during the quarter — a significant acceleration from the 63% increase reported in the previous three-month period. Analysts had projected an average gain of around 64%, according to figures compiled by LSEG, meaning Google blew past those forecasts by a wide margin.
Google ranks as the third-largest cloud services provider globally, trailing only Amazon Web Services and Microsoft. The company has seen demand surge as enterprises scramble to lock in the computing power required to build, train, and operate AI systems. That rush has helped Google secure significant partnerships, including a major deal with Anthropic.
The impressive cloud performance may help quiet some investor anxiety about the enormous sums Alphabet has been pouring into AI infrastructure. The company has rapidly expanded its data centers and invested heavily in cutting-edge chips, but shareholders have questioned whether those expenditures would eventually generate consistent revenue gains.
Across the broader technology industry, spending on AI is expected to exceed $700 billion this year alone. Financial firm Morgan Stanley has projected that figure could surpass $1 trillion in the coming year.
Despite the cloud wins, Google’s own AI development efforts have hit some turbulence. The company pushed back the planned June release of its next major AI model, Gemini 3.5 Pro, leaving it playing catch-up in the fast-growing AI coding tools market. Competitors Anthropic and OpenAI have continued rolling out updates tailored for business users, and Chinese open-source AI models have also gained significant ground.
On a brighter note, Google’s Search division has continued to thrive. AI-driven features like AI Overviews and AI Mode have drawn more users into longer, conversational searches, boosting overall query volume and deepening engagement. Google has taken advantage of that increased activity by expanding advertising placements within those AI-powered search tools, attracting more advertising revenue in the process.
Alphabet’s stock has been one of the stronger performers among the so-called “Magnificent 7” group of major tech companies this year, gaining close to 11%. However, concerns tied to the Gemini delays, the departure of several high-profile executives, and ongoing regulatory scrutiny have pulled the stock down roughly 9% since late April.
Competitors Microsoft and Amazon are both scheduled to release their own quarterly earnings results next week.
