Alphabet’s cloud division beats expectations on strong AI demand
Alphabet, Google’s parent company, performed better than expected last quarter, mainly thanks to strong growth in its cloud division. Revenue from Google Cloud beat analysts’ estimates, driven by persistently high demand for AI services.
Alphabet’s total revenue rose by 22% in the first quarter to $109.9 billion, with Google Cloud’s revenue growing by 63% to $20 billion. Net profit came in at $62.5 billion.
The cloud division has been growing faster than many other parts of the company for some time and is playing an increasingly important role in overall results. Margins also improved, contributing to profitability.
At the same time, the company invested heavily in AI and data centres to meet rising demand. These high expenses may weigh on profits in the short term, but are intended to lay the groundwork for further growth in the future.
At Google, around 75% of all new code is now written by AI. Programmers still review that code, but the bulk of the work is done automatically. In 2024 the share was still around 25%, and in 2025 roughly 50%.
To do this, Google mainly uses its own AI model, Gemini. In addition, the company is increasingly focusing on so-called AI agents: systems that can carry out tasks independently, such as writing, modifying and improving software.
Google is also actively encouraging the use of AI within the company. Use of these tools is even taken into account in staff performance reviews.
Other tech companies are following the same trend. At Microsoft, for instance, 20-30% of code already comes from AI, and companies expect this share to keep rising.
This week it also emerged that Google has joined a growing group of technology companies that have struck a deal with the US Department of Defense to use its artificial intelligence models for classified work.
The agreement gives the Pentagon permission to use Google’s AI for “any lawful government purpose”. That puts Google in the same bracket as OpenAI and xAI, which also have contracts to supply AI models for classified applications.
Google stated that it remains opposed to domestic surveillance and unsupervised autonomous weapons, and that providing API access under standard terms is a responsible way to support national security.
“It was a terrific quarter for Alphabet. Our momentum was on full display at Cloud Next last week, and the month of May brings even more with I/O, Brandcast and Google Marketing Live. I hope you’ll tune in to see our progress,” said CEO Sundar Pichai (pictured). “It’s clear that our AI investments and full-stack approach are driving performance across our business.”
Emerce
Subscribers 0
Fans 0
Followers 0
Followers