Google Cloud’s CEO Thomas Kurian said the company was capturing new customers faster because it has product differentiation due to years of work in AI.
The Alphabet unit (NASDAQ:GOOG) (NASDAQ:GOOGL) is also deepening its relationship with existing customers, and growing its total addressable market.
Kurian said the company has deep product differentiation in performance, cost, reliability, and efficiency in AI infrastructure. The company also provides differentiation by offering a leading suite of best-in-class generative AI models. “And finally, for many years now, we’ve been building domain-specific AI applications and agents, and that work is now seeing a lot of interest from customers,” said Kurian at the Goldman Sachs Communacopia + Technology Conference.
On AI monetization, Kurian commented that, “first of all, we monetize AI in 5 different ways. We’re seeing growth from net new customers. We’re seeing deeper relationship with existing customers. We’re broadening our addressable market. As a result of that, we’re seeing growth in revenue, our remaining performance obligations or backlog and operating margin.”
Kurian noted that the company has seen “28% sequential quarter-over-quarter growth in new customer wins in the first half of this year. 9 of the 10 top 10 AI labs and nearly all the AI unicorns are our customers.”
“And as Sundar and Anat, our CFO, have both mentioned, we’ve made billions using AI already. We’re growing revenue while bringing operating discipline and efficiency. So our remaining performance obligation or backlog is sometimes referred to, is now at $106 billion. It is growing faster than our revenue. More than 50% of it will convert to revenue over the next 2 years. So not only are we growing revenue, but we’re also growing our remaining performance obligation,” said Kurian.
The company noted that its AI systems are optimized for high-performance, reliable and scalable training as well as for inference.
AI inference is the process of running a trained AI model to make predictions on new, unseen data.
Talking about it latest AI models, Kurian said that compared to Gemini 1.5, which was launched in January, the company’s latest model Gemini 2.5 reached 1 trillion tokens 20 times as fast. The company is seeing large-scale adoption of Gemini by the developer community.
Kurian added that Google offers a leading suite of what’s called diffusion models to create images, video, audio, and speech among other things. “Canva is an example of a company using our diffusion models to create image and video content. ServiceNow is one of many SaaS companies that use our model, Gemini,” said Kurian
On the question of cloud adoption, Kurian said cloud adoption is still in its early stages.
“Some, for example, government agencies, some of them move a bit slower because of compliance and other regulation. Europe has been generally slower to move because of sovereign cloud requirements.”
Kurian said that organizations are using AI in 4 domains. Some companies are using it to build digital products, like Natura Cosmetics, and Snap (SNAP). Others are using it to transform customer service, not just in the call center, as in Verizon (VZ), but at the point of sale, as the company does with Wendy’s, according to Kurian.
Companies are also using it to streamline the core of the company and their back office. “Home Depot (HD) is using it to answer HR help desk,” said Kurian. “AES, which is a large energy company, streamline their regulatory and audit process, reducing the cycle time. Tyson Foods (TSN) is using it in supply chain.”
Google added that it is also seeing many organizations now using AI in their IT departments not just to write code but to improve the quality of code that’s being written.
Kurian said Google looks at investments in three big categories.
“Obviously, our supply chain and capital investments, which span data centers, power, long-term power contracts, what we’re doing with our different geographical locations because inference now needs to be in many different countries for sovereignty reasons,” Kurian added.
He noted that power is likely an issue, but the company was designing solutions for it.
“And we invested very early in water cooling and water cooling gives you another lift in throughput through these systems. So that’s an example of where we said, hey, there’s likely to be a power issue. Let’s design early a set of solutions,” Kurian noted.
Kurian added that the company also invests in its go-to-market organization.