Google Cloud just outgrew AWS and Azure for the first time in years, with a backlog of unfilled work that hit $462 billion last quarter.
That number roughly doubled in three months, even as Search revenue grew faster for the fourth straight quarter.
Even with both numbers climbing, the stock is up just 16% this year - trailing the Nasdaq despite AI gains across the business.
Google Cloud's revenue growth and profit margins both jumped last quarter, with the growth rate now topping AWS and Azure - the two businesses that have run the cloud market for more than a decade.
The backlog roughly doubled in a single quarter to $462 billion - contracts Google has signed but hasn't fully delivered against, because demand is running ahead of the capacity Google has built.
For the first time in a long time, Google is setting the pace in cloud - not chasing it.
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Search is still Google's biggest business, and it's still growing.
Search revenue has sped up for four straight quarters, driven by AI tools that target and price ads more precisely.
The fear all year was that AI would eat into search ads. So far, the numbers are saying the opposite.
A $462 billion backlog isn't a free win. Google has to keep building data centers and buying chips fast enough to deliver on it.
That means CapEx - spending on property and equipment like data centers and chips - stays high through FY2026 and FY2027, with the bill showing up well before the revenue does.
The bull case is simple: every dollar of that spend turns into cloud revenue, because the customers are already signed up.
The bear case is the same one hanging over every AI buildout right now - what happens if demand cools before the spending is paid off?
Google trades at about 25x forward earnings, a small step above its five-year average, while many AI-exposed names trade for much more.
Google has the fastest-growing cloud business, the largest search business, and a valuation that still sits near its five-year norm.
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