"Alphabet's third-quarter results showed that this shift is underway. The company's total revenue in the period rose 16% year over year to $102.3 billion. But Google Cloud revenue jumped 34% to $15.2 billion, and the segment's operating income surged 85% to $3.6 billion. Additionally, Alphabet's cloud backlog climbed 46% year over year to $155 billion, reflecting multi-year commitments as customers reserve capacity for AI workloads."
"First, it gives Alphabet a clearer second pillar of growth. Advertising will likely remain the company's biggest profit driver for a long time. But ad spending is cyclical, and competition for marketing dollars is constant. Cloud computing demand, by contrast, is being fueled by enterprises modernizing their information technology (IT) stacks and building generative AI applications -- to powerful secular trends that seem like they have plenty of runway left."
Alphabet's total revenue rose 16% year over year to $102.3 billion in the third quarter. Google Cloud revenue jumped 34% to $15.2 billion, while the segment's operating income surged 85% to $3.6 billion. Cloud backlog climbed 46% year over year to $155 billion, reflecting multi-year commitments as customers reserve capacity for AI workloads. Google Cloud is transitioning from a fast-growing subsegment into a meaningful profit contributor that can influence Alphabet's overall growth profile. Cloud demand is being driven by enterprises modernizing IT stacks and building generative AI applications, offering secular tailwinds compared with cyclical advertising.
Read at The Motley Fool
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