Alphabet cloud revenue jumps 82% to $5.14 billion

Alphabet’s cloud-computing arm just posted an 82 percent jump in revenue, its fifth straight quarter of accelerating growth, and executives say the next report in October could be even stronger.

The surge comes as customers lock in multi-year contracts worth half a trillion dollars. Alphabet told investors the division’s backlog now stands at $514 billion, with roughly $257 billion due within two years. That alone implies more than $128 billion in annual cloud revenue through 2026, yet analysts believe actual sales will keep climbing beyond those commitments. Google Workspace and other enterprise tools are getting a lift from Gemini, the company’s large-language model, and existing clients are already overshooting their spending plans by more than 50 percent.

Behind the numbers sits a massive build-out. Capital spending hit $45 billion last quarter, doubling from a year earlier, and 40 percent of that went toward new data centers and networking hardware. Google is also pushing custom AI chips called TPUs; inventory jumped from $2.4 billion to $10 billion in three months, a sign that third-quarter sales could accelerate. While profit margins look thin today, the sheer scale of contracted work and hardware demand suggests long-term cash generation could dwarf today’s outlays.

Investors are watching for two things next quarter: how quickly TPU revenue scales and whether capital intensity starts to ease. If Alphabet keeps capturing contracts at its current pace, the cloud division could rival its advertising business within years, turning today’s heavy spending into tomorrow’s cash engine.