Alphabet's Cloud Business Defies Expectations with Rapid Growth
Alphabet's (NASDAQ:GOOGL) cloud business is growing rapidly, with an 82% year-over-year increase in revenue to $24.77 billion in the June quarter.
This growth has occurred despite concerns that Alphabet's AI-related capital expenditures would break the company. However, Alphabet's CEO Sundar Pichai told investors that 'nearly 90% of the Fortune 100' uses Gemini Enterprise, and the Gemini App has 950 million monthly active users.
Alphabet's business model is based on three revenue engines: cloud computing, advertising, and YouTube. The company's self-funding edge over Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), and Meta Platforms (NASDAQ:META) gives it a significant advantage in the market.
The author of the article, Alex Sirois, believes that Alphabet's stock is undervalued at a price-to-earnings ratio of 15. He points out that the company's cloud backlog has nearly doubled sequentially to over $460 billion, and its operating cash flow was $164.71 billion in full-year 2025.