However, a Bloomberg News report Thursday (Oct. 29) points to a quarterly filing from the tech giant saying that upwards of a third of that quarterly growth stems from a joint venture that Alphabet partially owns.
This revelation, the report said, appears in the filing which discussed exposures to artificial intelligence (AI) risk beyond what Alphabet had discussed in its earnings call this week.
During that call, the company disclosed more than $1 trillion in purchase commitments, future leases and other obligations. According to Bloomberg, the filing shows roughly $98.5 billion in contingent commitments Alphabet could be responsible for under certain conditions, an increase of $23 billion from last quarter.
Among those commitments are guaranteeing data center lease payments, supporting partners’ power equipment purchases and a potential requirement to repurchase AI chip systems from customers, the report said.
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Google Cloud’s backlog of contracts came to $560.8 billion at the end of September, compared to $513.9 billion for the proper quarter, Bloomberg said. Of that figure, $16.8 billion is linked to a multiyear agreement with Crux AI, a venture Alphabet formed with Blackstone.
Dan Morgan, senior portfolio manager at Synovus Trust, told Bloomberg that investors view backlog as a key indicator of potential sales growth, but had not fully realized that Google Cloud’s demand came from a firm the company had helped start.
“It does kind of take a little bit of the luster off,” Morgan said. “It would be nice if it was coming from a bunch of outside customers. That is something that you do have to raise an eyebrow about — is this a self-fulfilling prophecy?”
PYMNTS has contacted Google for comment but has not yet gotten a reply. The company declined to comment when reached by Bloomberg.
Writing about the company’s earnings earlier this week, PYMNTS said the results “put a familiar fear back in focus: Big Tech’s artificial intelligence spending could outrun the earnings and cash needed to justify it.”
But aside from spending bubble concerns, executives discussed a development that could end up being more consequential for AI’s future: Agents that help users make purchases and carry out tasks across Google’s products.
On an earnings call, CEO Sundar Pichai described plans to bring capabilities created for enterprise customers to consumers, beginning with the Gemini app’s billion users.
“Agents will operate as a unifying layer across our products,” Pichai said, describing an expansion into Google Chrome, Android and Workspace.
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