Google Cloud is worth more than $20B but says growth was difficult

Google Cloud, a subsidiary of parent company Alphabet that provides business AI solutions, exploded in the first quarter, with revenue hitting $20 billion during that period, a 63% increase from the same period last year. However, investors were concerned about the issues surrounding the business and Google’s decision to distribute cloud power.

In first quarter of 2026The company said that its cloud growth was driven by strong performance in Google Cloud Platform, which grew at a higher rate than the growth of the overall revenue of the Google Cloud segment. (The Cloud component includes services such as architecture, data analysis, AI/ML tools, and Google Workspace.)

Alphabet CEO Sundar Pichai told analysts on the Q1 2026 call on Wednesday that this growth was due to “high demand” for Gemini Enterprise and its AI solutions, and he also pointed to the increased demand for infrastructure, including TPU equipment and data.

AI solutions were a major driver of cloud growth, with products built on Google’s genAI models growing nearly 800% annually. Google Gemini Enterprise also grew 40% quarter-on-quarter, the company said, and AI token growth through its API grew to 16 billion tokens per minute, up from 10 billion in the fourth quarter.

Fotosi saw other cloud events, including the acquisition of customers doubling year on year, growing to double the amount of $ 100 million to $ 1 billion a year, while the company signs several “billion dollars”. Clients exceeded their initial commitments by 45% quarter over quarter, he said.

However, the executive warned, there were obstacles to this growth, noting that Google Cloud’s revenue doubled in the quarter to $462 billion. He cited this as a positive for the company, noting that it shows how Google Cloud is different from other competitors.

“Obviously, we’re not struggling anytime soon,” Pichai said. “And for example, our cloud investment would be higher if we could meet those requirements. So we are working at the moment, and we are investing, but we have a stable plan, planned for the long term… we see amazing opportunities ahead,” he added.

The company expects to be operational with 50% of the remaining stock in the next 24 months.

Most of the company’s revenue comes from providing infrastructure through the cloud, and, with some customers, direct sales TPU hardware as well. Photos told investors that Google takes an approach that considers the return on capital investment (ROIC), which helps it to continue to sell well “at the margin”.