Driven by the AI wave, Google Cloud is transforming from a long-term loss-making division under Alphabet into...One of the fastest growing businessesAccording to Alphabet's Q3 FY2025 financial report, its cloud business revenue increased by 34% year-on-year, exceeding $15 billion. This strong growth was mainly attributed to market demand for AI infrastructure and services (including Google's self-developed Gemini model).
Google Cloud's current growth trend suggests it may challenge YouTube and become Alphabet's second-largest revenue source after search advertising.
However, Google Cloud's "counter-trend" growth is actually accompanied by huge investments. Alphabet has twice raised its capital expenditure forecast this year due to the need for cloud business infrastructure construction, with the latest estimated expenditure reaching $910 billion to $930 billion, and further suggesting that expenditure in 2026 may be even higher.
Introducing a "non-Google" culture and reforming sales strategies
The key figure in this transformation is Thomas Kurian, who joined Google Cloud in 2018. According to statistics from Synergy Research Group, under Thomas Kurian's leadership, Google Cloud's global market share has increased from 7% to 13% by 2025.
The report points out that this former Oracle executive introduced a "non-Google" culture to Google, including strict financial discipline and a customer-centric sales model, which completely changed the situation in which Google Cloud struggled to win over enterprise customers in the past.
Thomas Kurian's key changes included:
• Shift the sales team's focus from "order volume" to "revenue".
• Change the sales strategy from being based on "region" to being based on "industry" to improve service professionalism.
• Cut costs by opening new offices in areas with relatively low rents, such as North Carolina and Poland.
Key weapon: Opening up TPU computing power, securing a million-unit order from Anthropic
One of the key weapons behind Google Cloud's comeback is itsSelf-developed AI chip (TPU)Previously, TPUs were mostly used internally. The report states that in 2022, Thomas Kurian successfully persuaded the company to move the TPU sales team from the core engineering department to Google Cloud, giving it greater bargaining power in acquiring customers.
Under this strategy, Google Cloud began offering its powerful computing capabilities to external companies, including competitors. Thomas Kurian stated, "We are the only hyperscale data center operator that has both its own proprietary chips (TPUs) and its own proprietary models (Geminis)."
This strategy successfully attracted the attention of AI startup Anthropic, and the two parties reached an agreement in October of this year.Expanded AgreementAnthropic will utilize up to 100 million Google Cloud TPUs of computing resources. Besides Anthropic, AI developers including Apple and Safe Superintelligence have also adopted it.
Expanding internal influence, a costly path to catch up.
The rise of Google Cloud is changing the power distribution within Alphabet. Reports indicate that Thomas Kurian is gaining greater influence at the company's weekly leadership meetings, and Alphabet CEO Sundar Pichai stated, "Thomas Kurian has been actively speaking out to ensure we focus on our enterprise customers."
After suffering continuous losses from 2018 to 2022, Google Cloud finally turned a profit in 2023. Now, to meet the enormous computing power demands of AI, Alphabet is making unprecedented capital investments.
In response to concerns about an AI bubble, Sundar Pichai stated that Google Cloud is expected to be "very resilient" and emphasized that Google has been investing in AI for a decade and will continue to do so for the next decade.
