- Google Cloud revenue jumped to $13.6 billion in Q2
- Alphabet said it is upping its 2025 capex by $10 billion to meet rising demand
- Capacity constraints are expected to persist into early 2026
Alphabet is putting the pedal to the metal on its data center expansion, revealing plans to up its capital spending in 2025 as its cloud backlog surged past $100 billion.
CFO Anat Ashkenazi said on an earnings call the company is adding $10 billion to its capital expenditure plan, bringing its total spend in 2025 to $85 billion. The money, she said, will primarily go toward servers and accelerated data center construction.
Ashkenazi added the company expects capex to increase further in 2026.
The news came as Alphabet CEO Sundai Pichai noted the company’s Google Cloud backlog climbed 38% year on year to $106 billion. Highlighting demand growth, Ashkenazi added the unit inked “multiple billion-dollar-plus deals in the first half of the year.”
“We have been working hard to increase capacity and have improved the pace of server deployment,” Ashkenazi said. “We expect to remain in a tight demand-supply environment going into 2026.”
Google Cloud revenue in Q2 climbed 32% to $13.6 billion, with the segment’s operating income jumping to $2.8 billion from just under $1.2 billion in Q2 2024. Pichai noted Google Cloud’s annual revenue run rate is now in excess of $50 billion.
New Street Research analyst Dan Salmon wrote in a note to investors that demand for Google Cloud infrastructure is “underpinned both by continued strong demand generally for AI infrastructure but also by increasing awareness of the advantages of GOOGL’s AI compute infrastructure, particularly in custom chips.”
That said, he warned that the ability of chips and GPUs will heavily influence the “quarter to quarter revenue generation capability” for Google and other public cloud providers.
Google's AI stats
During the call, Pichai shared several interesting tidbits about the company’s cloud and AI efforts and customer usage.
- Google’s AI is processing over 980 trillion monthly tokens, up from 480 trillion in May.
- The Gemini app now has more than four hundred and fifty million monthly active users.
- The number of new Google Cloud Platform customers increased by nearly 28% quarter over quarter.
- Google’s open source agent development kit has garnered more than 1 million downloads in the four months since its release.
- AgentSpace, Google’s enterprise chat and search platform, has racked up over 1 million subscriptions ahead of its general availability.