SAN FRANCISCO (Reuters) -Alphabet’s Google Cloud revealed Tuesday it has lined up about $58 billion in new revenue over the next two years as itvies to become a more central component of the tech giant's future.
The company said during its July earnings that the cloud division had surpassed a $50 billion annual revenue run rate. Google Cloud's backlog of non-recognized sales contracts is growing even faster than its revenue, unit chief Thomas Kurian told investors at the Goldman Sachs Communacopia + Technology conference.
About 55% of the $106 billion backlog should convert into revenue within two years, he said. This number accounts only for existing commitments, not new contracts or customers that it expects to land. The unit saw a 28% increase in new customers quarter-over-quarter, Kurian said.
Nine of the 10 leading artificial intelligence labs in terms of size are now customers, Kurian said at the conference. That includes rivals of Google's own AI efforts like ChatGPT maker OpenAI, as Reuters first reported in June, and Anthropic,which was valued at $183 billion this month.
Cloud computing sales only accounted for 14% of Alphabet's total revenue last quarter, far less than the advertising that revolves around Google's search engine, but it is one of Alphabet’s fastest-growing business lines.
As the tech industry seeks to prove to Wall Street that AI can deliver returns commensurate with its hefty spending, Google Cloud has found itself in an advantageous position. The unit's rise comes as Google's core search business attempts to monetize new AI interfaces while battling regulatory challenges in Europe and the U.S. that could help rivals to gain ground.
In July, Alphabet CEO Sundar Pichai cited cloud demand as the primary reason for an increase in 2025 capex plans to $85 billion from $75 billion.
(Reporting by Kenrick Cai in San Francisco; Editing by Lisa Shumaker)
