Alphabet, Google's parent company saw a surprising 35% increase in Google Cloud revenue in the July-September quarter, sending its shares up 5.5% in premarket trade. Google Cloud's growth shows that it is growing more competitive with Amazon and Microsoft in the cloud business.

Highlights:

• Google Cloud revenue increased by 35%, the fastest growth rate in the previous eight quarters.
• Google's progress in AI technology, such as Tensor Processing Units (TPUs), was noteworthy.
• According to experts, this shows an increasing demand for cloud-based AI solutions, which might be positive signal for Amazon and Microsoft.

Alphabet recently revealed its revenues and a 35% jump in Google Cloud sales for the third quarter of the financial year 2023, beating the expected amount of 29%. This is the fastest cloud increase Google Cloud has witnessed in the previous two years, demonstrating how important Google Cloud has grown to Alphabet, which now accounts for 13% of overall sales.

Google's cloud growth this quarter is driven by a strong focus on AI features. Google integrated tools such as the Gemini AI chatbot into its cloud services, giving organizations more capabilities in data processing, code production, and cybersecurity. Its custom-built TPUs for AI are also drawing clients seeking high-performance processing capacity, setting it apart from Amazon's AWS and Microsoft Azure.

Even while Google Cloud has a much lesser market share than AWS and Azure, recent events indicate that Alphabet, which controls the firm, is determined to fight a tough war. Google has pledged to increase CAPEX in the financial year 2025, mostly to develop its worldwide data centers.

Analysts have also noted that Alphabet's expansion into the cloud market reflects a larger industry trend toward AI-powered cloud services.  Analysts also predict this as a positive signal for Amazon and Microsoft, indicating strong demand for AI-powered cloud services. Both companies are expected to announce their results soon.