How Big Is Alphabet’s Cloud Computing Business Now?


Apr. 6 2018, Published 7:14 a.m. ET

$1.0 billion quarterly cloud revenue

For the first time, Alphabet (GOOGL) has made us aware of the size of its cloud computing business, which falls under its Google unit. During the company’s last earnings call, Google CEO Sundar Pichai disclosed that Google Cloud has reached meaningful scale. Google Cloud is the brand name of Google’s cloud computing business. Amazon’s (AMZN) cloud computing unit is named Amazon Web Services, or AWS.

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Pichai said that Google Cloud was bringing in an average of $1.0 billion revenue per quarter. Amazon’s AWS unit generated $5.1 billion in revenue in 4Q17, representing 45% growth YoY (year-over-year). Google’s other revenue segment, under which cloud sales are booked, grew 38.2% YoY in 4Q17. Cloud computing revenue grew 98% YoY at Microsoft (MSFT), 16% YoY at Oracle (ORCL), and 104% YoY at Alibaba (BABA) in 4Q17.

Cloud deals worth over $1.0 million have tripled

The growth of Google Cloud seems to be fueled by large customers adopting the product. Alphabet said that the number of Google Cloud deals worth more than $1.0 million more than tripled between 2016 and 2017. The above chart shows revenue trends in Google’s other revenue segment, which includes cloud sales.

Betting on cloud to diversify revenue streams

Google parent Alphabet is banking on cloud computing, autonomous driving, and life sciences to stimulate more growth and diversify its revenue sources. Alphabet currently relies on advertising sales for over 80% of its revenue.


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