Alphabet’s Cloud unit saw revenues jump 63% to $20B in a single quarter and contracted backlog nearly doubled to $462B, with operating margins expanding to 32.9% as enterprise AI solutions drove growth. Management warns of near-term compute constraints despite a $190B capex plan, intensifying cloud competition for Amazon.
Alphabet’s Cloud division posted a 63% year-over-year revenue increase to $20 billion in the quarter, driven by strong demand for AI-powered infrastructure and enterprise solutions.
Contracted future revenue backlog for Google Cloud nearly doubled over three months to $462 billion, reflecting accelerating multi-year enterprise commitments for AI and cloud services.
Cloud operating margin expanded to 32.9%, up from 17.8% a year earlier, underscoring the division’s ability to monetize AI offerings and generate robust profits.
Despite planning up to $190 billion in capital expenditure for 2026, management cautioned that near-term compute capacity shortages are limiting revenue potential and could impact how Google meets enterprise demand.
