Alphabet CEO Sundar Pichai is doubling down on investments in Google Cloud. In the fourth quarter of 2024, Google Cloud’s revenue climbed 30% to $12 billion, as stated in the company’s latest financial report.
Growth came primarily from cloud infrastructure services and rising interest in AI-related offerings, including generative AI. Pichai highlighted that they had initially projected an annual revenue run rate exceeding $100 billion for their Cloud and YouTube divisions combined, but they’ve surpassed those expectations. Together, Google Cloud and YouTube finished 2024 with a run rate of $110 billion. Pichai expressed confidence in future opportunities and announced plans for a hefty $75 billion in capital expenditure for 2025.
During a recent conference call, Pichai emphasized how quickly they are launching new products, which is clearly reflected in the increase in product usage and revenue. He pointed out that Google’s extensive global network of cloud regions and data centers acts as a solid foundation for business growth.
Pichai mentioned a unique advantage: Google develops every part of its tech stack—from hardware to software. This integration allows them to improve efficiency at all levels, whether in training or boosting developer productivity. In 2024 alone, they established 11 new cloud regions and datacenter campuses worldwide and enhanced the performance of existing hardware.
He noted impressive statistics: Google’s datacenters deliver nearly four times more computing power per unit of electricity compared to five years ago. This efficiency, along with scalability and cost-effectiveness, is why many organizations are opting for Google Cloud.
Cloud usage has skyrocketed, with customers consuming over eight times the computing capacity for training and inferencing compared to a year and a half ago. Pichai reiterated their commitment to invest in the cloud to meet rising customer demand.
In 2024, they saw first-time commitments from new customers more than double compared to the previous year. Existing customer relationships also strengthened; the number of significant deals exceeded $1 billion, and contracts worth over $250 million doubled.
Lee Sustar from Forrester observed that Pichai’s focus on Google Cloud and YouTube indicates key changes for Alphabet, showing its stability beyond traditional search advertising. If Google Cloud operated independently, its AI growth would likely please investors and reaffirm its position in the enterprise IT market. However, Pichai’s messaging combines Cloud and YouTube to demonstrate that Alphabet is diversifying its revenue sources and becoming less reliant on ad revenues. Sustar added that enterprises looking for long-term AI cloud solutions will need to evaluate Google Cloud and its competitors closely.