In its latest earnings report, Alphabet’s Google Cloud said that revenue increased by 35 percent year-over-year (YoY).

The cloud business posted revenues of $11.4bn, with an operating margin of 17 percent. Operating profit increased sevenfold to $1.9bn from $266m in the same period last year.

CEO Sundar Pichai said that the “overall opportunity [for cloud] is increasing as customers embrace GenAI.”

Capex remained high at $13bn for the quarter across the company, up from $8.1bn in 2023. The majority of that spend went to “technical infrastructure,” CFO Anat Ashkenazi said, of which around 60 percent went towards servers and 40 percent towards data center and networking equipment.

Ashkenazi added that, while Q4 will likely be similar, the company anticipates that capex will increase in 2025, though “likely not the same percent step up that we saw between ’23 and ’24.”

Google has committed to more than $7bn in planned data center investments this quarter, of which $6bn are in the US. The company plans to optimize its “physical footprint, improving the efficiencies of our technical infrastructure, and streamlining operations across the company through the use of AI,” Ashkenazi said.

Both Pichai and Ashkenazi noted efforts that the company is starting to make to improve its operating “efficiency,” with several references to “optimizing our headcount.” Whether this will involve growth or further job cuts was not specified.

Google’s financial results come just one day after competitor Microsoft accused the company of launching “shadow campaigns” against it, aiming to “discredit Microsoft with competition authorities, and policymakers and mislead the public.”

Google responded: “We’ve been very public about our concerns with Microsoft’s cloud licensing. We and many others believe that Microsoft’s anticompetitive practices lock-in customers and create negative downstream effects that impact cybersecurity, innovation, and choice.”

Microsoft and Amazon Web Services are both set to also release their earnings for the quarter this week.

https://www.datacenterdynamics.com/en/news/google-cloud-q3-2024-revenue-hits-114bn-data-center-spend-set-to-increase-in-2025/