Google’s cloud revenues jumped by 28pc in Q1, a key focus for the company as its adtech and search empire comes under growing antitrust scrutiny.
Cloud was being watched closely by analysts yesterday as Google parent company Alphabet announced its Q1 earnings. It is widely thought that, while it represents only a small percentage of revenues, it is a crucial growth target for the company, given the pressure on its search and adtech operations, with growing calls for a break-up of the group.
“The Google Cloud numbers got more scrutiny than ever in Alphabet quarterly earnings as antitrust actions threaten the company’s search-based ad empire and utter dominance of web market,” said Forrester principal analyst Lee Sustar.
“Certainly, the $12.3bn revenues, a jump of 28pc over the same period a year earlier, looks good. But in terms of operating income, Google Cloud accounts for a little more than 7pc of Alphabet’s quarterly total of $30bn.”
Sustar cautioned that, while Google Cloud has established itself as a viable option for enterprise, with its central AI value proposition, it may not escape unscathed should Alphabet have to divest of other operations.
“Enterprise customers should understand that Google Cloud also functions as an enabler of Alphabet’s far wider operation,” he said. “Any move to break up Google could complicate the company’s enterprise cloud business.”
Overall, the Alphabet earnings were positively received, with its share price rising in late trading yesterday. The groups shares were, like many tech stocks, down 16pc in 2025 but, according to Bloomberg, they rose more than 5pc in extended trading following the earnings report.
Bloomberg also emphasised that that the cloud unit is “so far the clearest indicator of how the AI boom is contributing to the company’s sales, as start-ups that require more computing power for their work become customers”. Today Google Cloud lags well behind its biggest rivals Microsoft and Amazon.
Overall, the results were ahead of analysts’ expectations with Q1 revenues boosted by profits in its search advertising unit. Alphabet’s Q1 net income rose to $34.5bn, with earnings at $2.81 per share, above analysts’ estimate of $2.01.
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