Google’s cloud business has shown impressive growth, achieving a 35% increase year over year in Q3, reaching $11.35 billion.
This growth rate has accelerated from 29% in the previous quarter, signaling to investors that Google is successfully gaining ground in the competitive cloud computing and artificial intelligence markets, according to CNBC.
Amazon Web Services, which remains the market leader, grew 19% to $27.45 billion, meaning it’s more than twice the size of Google Cloud but expanding about half as quickly.
Second-place Microsoft said revenue from Azure and other cloud services grew 33% from a year earlier.
Five of the six trillion-dollar tech companies reported results this week, with AI chipmaker Nvidia as the outlier. Amazon, Alphabet and Microsoft always report around the same time, giving investors a snapshot of how the cloud wars are playing out.
“While Alphabet has often been criticized as a Johnny-one-note for its dependence on digital advertising, the rapid growth of Google Cloud has begun to diversify the company’s revenue,” analysts at Argus Research, who recommend buying the stock, wrote in a report on Oct. 31.
Google has turned a corner in its cloud business, reporting a 17% operating margin in the third quarter, following its first profitable year last year.
This marks a significant shift, as the cloud segment had previously been a financial drain for the company. This profitability indicates that Google is not only growing its cloud revenue but also managing costs effectively, which bodes well for its long-term strategy in the competitive market.
It was “a real beat to expectations there,” Melissa Otto, head of technology, media and telecommunications sector research at Visible Alpha, said.
