wutzkoh – stock.adobe.com
As Google’s cloud business grows thanks to artificial intelligence
Sundar Pichai has acknowledged that the parent company Alphabet must find ways to partner with artificial intelligence (AI), agentic providers.
Revenue for the public cloud business was $13.6bn in the quarter ending June 30, a $3.3bn increase compared to the same quarter of 2024.
Pichai said that AI is positively impacting all parts of the business and driving strong momentum.
A transcript of the company’s earnings call, posted online, shows that AI is positively impacting every part of the business.
According to Motley Fool (19459070), he stated that the capital expenditures (CapEx) spent on Google’s cloud and AI capabilities, as well as other investments, have “a healthy ROI”. Pichai said that the value Google’s AI clients receive “is growing significantly”, and that this would help his business. Later this year, more servers and datacentres will be online.
Lee Sustar, principal analysts at Forrester, spoke about the investment in cloud infrastructure. “Google Cloud was once a sidelight of Alphabet’s earning and beset by huge losses. It is now standing out in a significant earner with a 32% increase in earnings compared to a year ago.
He said that “AI is not the only reason for this increase, but it’s a major factor.” Google Cloud, he continued, has built out a wide enterprise computing capacity, beyond its signature data analytics and AI offerings.
The operating margin has doubled from about 10% to around 20%. This shows that Google Cloud is able to grow without burning through all its revenue on AI investments. Google Cloud’s figures show that the era of AI-native clouds is here.
Agentic Google Search
Pichai, when asked about the growth in agentic AI, said: “Just as with the early days of web, it has aspects that will expand the access and grow the uses cases, etc.” I think these elements are present.
He added that, beyond the technology itself, “we have to solve the different business models for all the players involved.” The value proposition is equally important for all players, and I believe that’s what’s going be the ‘unlocking’ here.
Project Mariner, the company’s initiative, is integrating Gemini AI functionality to Google Search in order to deliver agentic abilities, which use natural language to assign AI to handle time-consuming task.
Robby Stone, vice-president for product at Google Search, explained that this capability would save time by allowing it to perform multiple searches, such as on a ticket booking website, to determine the best way to book seats for people in a group.
An example is
Deep Searchis an advanced research tool within Google Search that the company released on July 16. Google said Deep Search saves time for researchers by allowing them to conduct hundreds of searches. It can also reason across disparate information sources to produce what Google calls a “comprehensive, fully-cited report”. Forrester’s principal analyst Nikhil Lai stated that Google seems to be copying rivals like OpenAI and Perplexity, rather than competing with them. “Google is spending a lot of money to keep up with OpenAI and Perplexity who launched agents for deep-research more than a quarter earlier than Google,” he said.
The race to the bottom is heating up. If Google can convince a critical mass to shop in AI Mode before ChatGPT and Perplexity, it will maintain its position at the top of the search engine market.
By: Esther Shittu
Google expands Gemini, Search as AI competitors encroach.
By: Esther Shittu
