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Brief description of the dive:
- Google Cloud revenue jumped, rising 35% year-over-year to $11.4 billion, driven by growth in AI infrastructure, generative AI solutions and core products, Google CFO and senior vice president Anat Ashkenazi said Tuesday during on the company’s Q3 2024 earnings call.
- Hyperscaler saw a steady acceleration in revenue growth over the past year from 22% in the third quarter of 2023 to 28% and 29% in the first two quarters of 2024, respectively.
- Increased enterprise consumption of Google’s cloud database combined with the Vertex AI model personalization platform is fueling the growth spurt, Google CEO Sundar Pichai said. BigQuery’s machine learning operations have grown 80% over the past two quarters, according to Pichai.
Dive Insight:
Cloud revenue growth is being matched by massive investments in data center infrastructure to build capacity.
Google spent $13 billion on capital investments in the three-month period ending Sept. 30, up 63% from the $8 billion the company spent in the third quarter of 2023. Year-to-date, the company has poured $38 billion into construction of infrastructure, which is an increase of 80% compared to the same period last year.
Ashkenazi broke the third-quarter spending into two categories: technical infrastructure, which accounted for the bulk of the $13 billion, and facilities. The first and largest of these buckets includes AI-optimized chips and servers, as well as data centers and networking equipment.
“Innovation in AI requires global reach, which we have through our products and platforms, as well as continued significant capital investment,” said Ashkenazi, who joined Google and Alphabet in June when the company’s former CFO Ruth Porath began her new role as President and Chief Investment Officer.
Google remains the smallest of the three major hyperscalers, with approximately 12% of the market. AWS, the leading provider, controls 32 percent of the cloud market, and Microsoft has a 23 percent share, according to the latest analysis by Synergy Research Group. All three companies have invested tens of billions of dollars in infrastructure construction this year.
Ashkenazi said he expects capital investment to increase next year. But the company is also looking for ways to optimize costs.
“We are working to balance our investments in AI and other growth areas with the spending discipline needed to fund these activities,” she said.