Google Cloud Soars 34% to $15B, Powering Alphabet’s AI-Driven Growth

Google Cloud recorded impressive Q3 2025 results, growing 34% year-over-year (yoy) to achieve $15.2 billion in revenue, fueled by a sharp acceleration in the adoption of AI-driven infrastructure, the rapid expansion of generative AI products, and the overall cloud sophistication of enterprises of all sizes. The rapid acceleration has not only solidified Google Cloud’s status as the fastest-growing Alphabet business but also validated the strategic potential of AI spending and strong technical infrastructure in the unfolding cloud competition.

Cloud Revenue and Financial Impact

The company earned $15.2 billion in Q3 revenue for Google Cloud, driven in part by the continued strength of its core offerings, such as Google Cloud Platform and Gemini AI solutions, as well as an increasing impact from its custom chip-powered infrastructure solution. The division generated an operating income of $3.6 billion—a figure that exceeded expectations and marked a critical turnaround from historical losses to strong profitability. A substantial cloud backlog, which reached $155 billion in the quarter, suggests rapid contract growth and an unused customer appetite, both driven by the rapid rise of enterprise-friendly generative AI.

Alphabet, Google’s parent company, achieved its first-ever $100 billion quarter in the third quarter, with total quarterly revenue of $102.35 billion—a 16% increase year over year. Furthermore, the business increased its net income by 33% to $35 billion, and diluted earnings per share increased to nearly $2.87. As the value of Alphabet’s stock soared, shares rose in response to investors’ enthusiasm over both its core advertising strengths and the cloud division’s ability to accelerate.

AI Investments and Capex Expansion

Google’s ambitious AI plans are evident in its doubling down on technical infrastructure and a significant global data center expansion. Capital expenditures are expected to range from $91 to $ 93 billion in 2025, up from $85 billion in 2024, with approximately 60% allocated to servers and the remainder to data centers and networking equipment for AI workloads. These investments range from large regional buildouts, such as a $15 billion, 1-gigawatt AI and data center hub in India’s Andhra Pradesh.

Such investments will further strengthen its competitive positioning and AI innovation capacity worldwide. Google Cloud’s new source of momentum is built on years of investment in TPUs, other purpose-built chips, and custom GPUs, as well as the rapid growth of Gemini’s AI models and global deployments of AI-driven enterprise services. The Gemini App has quickly grown to over 650 million monthly active users, with the new AI Mode contributing to increased growth in the overall total number of queries for search.

Competition and Market Position

Cloud led the way for Google Cloud on its way to meteoric cloud development and cutthroat competition at Microsoft Azure and Amazon Web Services. This quarter, on the Azure cloud business, Microsoft announced a 40% climb, leaving Microsoft behind. Microsoft. Google’s market share expands from 7% in 2018 to 13% by 2025, underscoring CEO Sundar Pichai and Cloud head Thomas Kurian’s efforts to transform the company’s focus on cloud computing and attract more customers. More than $1 billion in contracts supported Google’s cloud during the first nine months of this year, surpassing the aggregate of the previous two years. Most of Google’s trades are high-profile, for instance, a $10 billion, six-year contract with Meta.

Subscription Growth and Business Segmentation

Beyond cloud and ads, Alphabet’s subscription ecosystem passed 300 million paid users, led by Google One and YouTube Premium. Google Search and advertising remain a revenue backbone at $56.6 billion, while YouTube ads posted $10.3 billion this quarter.

Industry Impact and Future Outlook

Google’s performance sets a new standard for demand, signalling the company’s “full stack” integration of chips, infrastructure, and software. Moreover, Google routinely stands out as its cloud and AI-driven revenues are expected to become more central to its business, closing gaps with competitors and accelerating new business. The shift to cloud-based, AI-resourced computing is at an all-time high across industries. Therefore, we expect Alphabet’s record-breaking performance to continue.

Key Figures (Q3 2025)

Google Cloud’s Q3 2025 results mark a new era for Alphabet, solidifying its transformation into an AI-first, cloud-centric technology powerhouse.