Google Cloud CEO Thomas Kurian speaks at the Google Cloud Next event in San Francisco on April 9, 2019.
Michael Short | Bloomberg | Getty Images
The top three cloud infrastructure providers all beat analysts’ expectations in their earnings reports late Wednesday; google was outstanding, recording the fastest growth rate in history.
Google is chasing Amazon Web services and microsoft Azure in the public cloud market is booming as demand for access to artificial intelligence models and services skyrockets. All three vendors offer a suite of tools for building and running a company’s products, and they also offer many proprietary AI models and specialized hardware.
“Wow, that was one quarter,” Synergy Research analyst John Dinsdale said in an email after the results were announced. His company estimated that spending on cloud infrastructure reached $129 billion during the period.
“Our forecasts point to sustained strong growth over the next few years as AI continues to drive adoption, unlock new use cases, and drive revenue for cloud providers,” Dinsdale said in a Synergy update.
Google Cloud revenue, which includes infrastructure and enterprise productivity apps, rose 63% to $20.03 billion, beating the StreetAccount consensus of $18.05 billion. This is the highest growth rate since Google began reporting cloud results in 2020.
In addition to offering a complete infrastructure suite for AI workloads, Google is firmly competing with OpenAI and Anthropic in the AI modeling market as Gemini gains adoption. The company is also seeing accelerated growth from its homegrown tensor processing units (TPUs). Nvidia’s Graphics processing unit, or GPU.
“For the first time, our enterprise AI solutions have become a major growth driver for our cloud,” Alphabet CEO Sundar Pichai said in a webcast for analysts on Wednesday. Revenue from products built using Google’s generative AI models has increased by 800%, Pichai said.
Shares of Google’s parent company Alphabet rose 9% on Thursday. Amazon rose 0.8%. Microsoft fell about 4%.
AWS, the leader in the cloud infrastructure market, saw revenue increase 28% to $37.6 billion. The consensus among analysts surveyed by Street Account was nearly $1 billion lower.
AWS customer spending on the Bedrock service for building AI agents and applications surged 170% from the fourth quarter, and the company consumed more tokens in the first quarter than in the company’s history through 2023, Amazon CEO Andy Jassy said on the company’s earnings call.
This result comes a day after AWS announced that OpenAI models are coming to Bedrock and that the new Bedrock service will enable clients to build advanced agents that integrate with their existing infrastructure.
“OpenAI has already said there is unprecedented demand for this new product, and we feel there is strong interest from customers,” Jassy said.
Microsoft, the second-largest cloud supplier, reported 40% growth for Azure and other cloud services, beating StreetAccount and CNBC forecasts of 39.3% and 38.8%, respectively. Management expects Azure growth in the second quarter to be 39% (40% excluding currency), above the StreetAccount consensus of 37%.
Microsoft CEO Satya Nadella said on a conference call that the number of customers adopting Anthropic and OpenAI models through the company’s platform has doubled from last quarter.
Expansion comes at a high cost, as all three companies have told investors they will spend nearly $600 billion in capital spending this year.
There is also competition from smaller so-called neo-cloud providers. That group includes companies such as: core weave and NeviusDinsdale said, has captured 5% of the cloud market.
WATCH: ‘Fast Money’ Traders React to Alphabet’s Strong Earnings Growth and Strong Cloud Growth
