Google Cloud revenue doubles to $31 billion as cash flow turns negative
Google Cloud revenue more than doubled to $30.7 billion in the third quarter.
The short version
- Sundar Pichai, the head of Alphabet, reported annual sales topped $400 billion.
- Capital spending reached $51.4 billion to fund the artificial intelligence race.
Check your statements if you hold tech shares. Alphabet, which owns Google and YouTube, just reported that its Cloud computing division more than doubled quarterly revenue to $30.7 billion, according to Fortune. Alphabet CEO Sundar Pichai told analysts on Wednesday that the Cloud unit is now running at an annual rate above $70 billion.
Total third-quarter revenue reached $127.6 billion, up 25% from a year earlier. Earnings per share tumbled to $2.12 from $2.87 due to an $8.7 billion paper loss on equity investments. Operating income rose 30% from a year ago to $40.6 billion.
Alphabet stock dipped as much as 8% in after-hours trading following the report. Capital spending more than doubled to $51.4 billion compared to $24 billion a year ago as companies race to build artificial intelligence computing power. That heavy spending swung Alphabet's free cash flow down to negative $9.1 billion, compared to negative $5.9 billion in the previous quarter.
Melissa Otto, the global head of Visible Alpha Research at S&P Global, noted that investors worried profit margins had peaked, but the Cloud margin actually widened to 36.2%. For any business owner watching the tech giants, the massive spending on server infrastructure shows no signs of slowing down.
Photo: Austin McKinley, CC BY 3.0, via Wikimedia Commons
