Following years of heavy investments and hefty losses, Google Cloud has finally posted its first profitable quarter as Alphabet CEO Sundar Pichai predicts better times ahead.
A $7.45 billion revenue in parent company Alphabet’s Q1 2023 saw the division achieve an operating income of $191 million, or around 2.6%. Far from aspirational, but a huge leap forward compared to the previous year which reflected a $706 million loss, or the $14.6 billion in losses in the three years leading up to 2021.
That said, Google Cloud’s profit was just a tenth of that of its largest competitor AWS, behind which and Microsoft Azure it trails in third place.
Google Cloud is now a profitable business
The billions in revenue have until now been offset by similar amounts in investments and other spend, but accounting for around 10% of Google’s overall revenue and playing cloud home to some of the world’s largest companies, like PayPal and UPS, Google Cloud could now be in the position to grow profits year-on-year and take on the giants.
The artificial intelligence revolution is also expected to have an unknown impact on Google’s finances, with potential for large revenue and an uncertain infrastructure spend laying out a possibly fluctuating path ahead.
Even though things are now looking up, Google Cloud isn’t out of the woods yet. Earlier this year, the division notified workers that they would be working in the office on alternate days with a colleague under a new desk-sharing initiative to help the company cut on real estate spend – a move that was met with backlash from workers.
More broadly, Google has been far from immune from the economic pressures facing big tech firms in recent months, having announced 12,000 redundancies across its businesses.