Google Cloud Surpasses $20B in Revenue, But Growth is Capacity-Constrained

Google Cloud, the business under parent company Alphabet, has reported a blowout first quarter with revenues topping $20 billion, a 63% increase from the same period last year. However, investors were concerned about the constraints surrounding the business and how Google decides to allocate cloud capacity.

Google Cloud's growth was driven by strong performance in the Google Cloud Platform, which grew at a higher rate than the Google Cloud division's overall revenue growth. The Cloud division includes a variety of services like infrastructure, data analytics, AI/ML tools, and Google Workspace.

Alphabet CEO Sundar Pichai told analysts on the Q1 2026 earnings call that this growth came from "strong demand" for Gemini Enterprise and its AI solutions, and pointed to an increased demand for infrastructure, including TPU hardware and data centers.

AI solutions were the largest driver of cloud growth, with products built on Google's generative AI models growing nearly 800% year-over-year. Google Gemini Enterprise also grew 40% quarter-over-quarter, the company said, and AI token growth via its API grew to 16 billion tokens per minute, up from 10 billion in the fourth quarter.

"Obviously, we are compute constrained in the near-term," Pichai said. "And as an example, our cloud revenue would have been higher if we were able to meet that demand. So we are working through that moment, and we are investing, but we have a robust, long-range planning framework … we see extraordinary opportunities ahead," he added.

The company expects to work through 50% of the backlog over the next 24 months, it said.

Much of the company's revenue potential comes from providing infrastructure through the cloud and, with some customers, the direct sale of TPU hardware as well. Pichai told investors that Google takes an approach that considers the return on invested capital (ROIC), which helps it to continue to properly invest in the "cutting edge."

TechCrunch Disrupt 2026 is coming soon to San Francisco, where you can meet your next investor or portfolio startup at one of the world's largest and most influential tech conferences.

• Google Cloud's growth was driven by strong demand for AI solutions and infrastructure.
• The company expects to work through 50% of the backlog over the next 24 months.
• Google takes an approach that considers the return on invested capital (ROIC), which helps it to continue to properly invest in the "cutting edge."