Artificial Intelligence has transformed Google Cloud into Alphabet’s fastest-growing business, driving massive revenue growth and reshaping the company’s priorities. In the third quarter, cloud revenue surged 34% to over $15 billion, powered by demand for AI infrastructure and services. This remarkable rise shows how AI has turned a once-loss-making division into a core pillar of Alphabet’s success.
Under CEO Sundar Pichai’s leadership, Google Cloud is now challenging YouTube as the company’s second-largest revenue generator after search advertising. Pichai emphasized that Google Cloud will play an even more central role in Alphabet’s long-term growth. His focus on innovation, AI integration, and enterprise partnerships has redefined the company’s strategic direction.
Much of this success belongs to Thomas Kurian, who took over Google Cloud in 2018. Kurian’s disciplined approach replaced Google’s casual culture with a focused, revenue-driven mindset. He streamlined operations, reduced costs, and built a team that prioritizes customer relationships. Consequently, Google Cloud’s market share jumped from 7% to 13% between 2018 and 2025.
Moreover, the adoption of generative AI has been a major catalyst. Companies that once relied solely on Amazon and Microsoft now view Google Cloud as a strong alternative. Today, nine of the world’s top ten AI labs use Google’s AI tools, including OpenAI, Anthropic, and Safe Superintelligence. This shows how AI transformed Google Cloud’s reputation from an underdog into a trusted partner.
Kurian also made a bold decision to sell Google’s Tensor Processing Units (TPUs) externally. This allowed customers, including AI giants, to access Google’s cutting-edge chips. The move increased sales and expanded Google Cloud’s reach across industries seeking scalable AI solutions. It also positioned Google as the only hyperscaler offering both proprietary chips and AI models.
The shift in internal power within Alphabet is now evident. Kurian’s influence in decision-making has grown, with a strong focus on enterprise customers. However, this rapid expansion comes with soaring costs. Alphabet’s capital spending is projected to exceed $90 billion in 2025, primarily to meet cloud infrastructure demands.
Despite growing competition and rising expenses, Pichai remains confident. He believes Google Cloud’s AI-driven growth offers long-term stability even amid market uncertainties. With deep AI roots and expanding enterprise adoption, Google Cloud stands ready to shape the next decade of Alphabet’s evolution.
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