Google Cloud revenue surged 34% in the third quarter and is hitting an annual run rate of nearly $61 billion.
In the third quarter, Google Cloud delivered revenue of $15.2 billion with operating income of $3.6 billion. Google Cloud saw strength in core AI infrastructure and generative AI products.
The Google Cloud gains landed as Alphabet reported better-than-expected financial results overall. Alphabet reported third quarter net income of $35 billion, or $2.87 a share, on revenue of $102.35 billion, up 16% from a year ago.
Wall Street was looking for third quarter revenue of $99.89 billion with earnings of $2.26 a share.
Alphabet said that Google Search, YouTube ads, Google subscriptions and Google Cloud all delivered double-digit growth in the third quarter.
CEO Sundar Pichai said the company saw strength across every unit to deliver its first $100 billion quarter. "Our full stack approach to AI is delivering strong momentum and we’re shipping at speed," said Pichai.
Capital expenses in the third quarter were $23.95 billion, up 83% from a year ago.
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By the numbers:
- Gemini processes 7 billion tokens per minute via direct API use.
- The Gemini App has more than 650 million monthly active users.
- Google Cloud ended the quarter with a backlog of $155 billion.
- YouTube Premium and Google One drove more than 300 million subscriptions.
- Alphabet's other bets, which includes Waymo, had third quarter revenue of $344 million with a loss of $1.43 billion in the third quarter.
- Free cash flow in the third quarter was $24.46 billion, up 39% from a year ago.
On a conference call, Pichai said:
- "Our extensive and reliable infrastructure, which powers all of Google's products, is the foundation of our stack and a key differentiator. We are scaling the most advanced chips in our data centers, including GPUs from our partner, Nvidia, as well as our own purpose built GPUs, and we are the only company providing a wide range of both."
- "We are investing in TPU capacity to meet the tremendous demand we are seeing from customers and partners."
- "Over the last quarter, we rolled out AI Mode globally across 40 languages. It now has over 75 million daily active users, and we shipped over 100 improvements to the product in q3 an incredibly fast pace. Most importantly, AI mode is already driving incremental total query growth for search."
- "The number of new Google Cloud customers increased by nearly 34% year over year. We are signing larger deals. We have signed more deals, Over $1 billion through Q3 this year than we did in the previous two years combined. More than 70% of existing Google Cloud customers use our AI products."
- "Over the past 12 months, nearly 150 Google Cloud customers each processed approximately 1 trillion tokens with our models for a wide range of applications."
