Tech giant Google arounds $14 billion on server purchases within a span of 91 days, hinting at further significant financial commitments in the near future.
In a remarkable turn of events, Google Cloud, a division of Alphabet Inc., has experienced unprecedented growth in the first half of 2025, signing as many million-dollar deals as it did in all of 2024. This surge in demand has not gone unnoticed, with Alphabet's shares popping by a few percentage points in after-hours trading.
The increased demand for Google Cloud's services and AI infrastructure has led to a significant boost in Alphabet's capital expenditure (capex) budget. The tech giant has raised its 2025 capex forecast by $10 billion, bringing it to a total of $85 billion, a 62% increase compared to 2024’s $52.5 billion. With customer demand continuing to outpace current capacity, particularly in infrastructure needed to support AI and cloud services, spending is expected to increase further in 2026.
Google Cloud's financial performance in Q2 2025 mirrors this growth trend. The company's revenue soared to an impressive $13.6 billion, representing a 31-32% year-over-year increase. Operating income followed suit, rising substantially from $1.2 billion in Q2 2024 to $2.8 billion in Q2 2025, marking a 141% increase in operating income.
The growth is primarily attributed to rising demand for Google Cloud Platform’s core products, AI infrastructure, and generative AI solutions. Google Cloud's CEO, Sundar Pichai, highlighted the company's ability to secure larger deals and increased customer count, reinforcing its robust growth trajectory towards an anticipated $50 billion annual revenue goal.
Meanwhile, the "Other Bets" segment, which includes ventures like Waymo and smart glasses, produced $373 million in revenue but had a $1.2 billion loss. Waymo, the self-driving car subsidiary, has autonomously driven over one hundred million miles on public roads, indicating promising progress in this area. Alphabet is allocating more resources to businesses like Waymo to capitalise on this potential.
In other developments, revenue from search increased almost 12% to reach $54.2 billion. YouTube advertising revenues grew by 13% to $9.8 billion. Combined revenue from subscription platforms and devices grew by 20% to $11.2 billion, with YouTube subscriptions being the main driver.
As Alphabet continues to invest in its expanding businesses, it plans to bring more data centers online towards the end of the year. Despite keeping AI data in the UK, Google Cloud's support will remain offshore.
In an optimistic outlook, Pichai rated smart glasses as an "exciting new emerging category" and expects phones to remain at the centre of the user experience for the next two to three years.
This growth spurt for Google Cloud and Alphabet is a testament to the growing demand for cloud computing services and AI infrastructure, positioning them well for the future.
- The capital expenditure (capex) budget of Alphabet has significantly increased due to the surge in demand for Google Cloud's services, particularly AI infrastructure.
- Google Cloud's growth trajectory is reinforced by its ability to secure larger deals and increased customer count, with an anticipated $50 billion annual revenue goal.
- As Alphabet continues to invest in its expanding businesses, it plans to bring more data centers online, maintaining Google Cloud's support offshore.
