Google’s business selling access to its Gemini AI models has surged over the past year, indicating the improving quality of those models, The Information reported, citing people familiar with Gemini’s sales.
This could increase revenue from Google Cloud’s core business of server sales, as the money customers spend on AI tends to lead to additional spending on other Google products, the report added, citing a person with knowledge of Google’s sales.
Google did not immediately respond to a request for comment from Seeking Alpha.
The improvements could be reflected in Alphabet’s fourth-quarter earnings, which the company is slated to report on Feb. 4.
Alphabet’s (GOOG) (GOOGL) unit Google sells access to its AI models via Google Cloud through an application programming interface, or API. Requests sent to the Gemini API, known as API calls, more than doubled from about 35B in March 2025, when Gemini 2.5 was first released, to nearly 85B in August 2025, according to internal data reviewed by the news outlet.
A key challenge Google still faces is persuading businesses to pay for complex software it has developed to run on top of its AI models. That software offers the company a way to increase the profit margins on its AI business, the report added, citing people who have worked at Google Cloud.
At the core of the strategy is Gemini Enterprise, which combines access to Google’s Gemini chatbot with the ability to search across company data and a platform for building and using AI agents, the report noted.
A Google spokesperson told the news outlet that Gemini Enterprise has grown to 8M subscribers across 1,500 companies and more than 1M subscribers who have signed up online, indicating that it is gaining ground.
Google is expected to highlight the growth of Gemini Enterprise when it reports earnings next month, according to the report.
“We are seeing tremendous momentum throughout our Cloud business, particularly our AI applications,” said a Google spokesperson.
However, the news outlet noted that according to interviews with several customers, cloud consultants, and employees, customer feedback has not been entirely positive. Simon Margolis, an executive at Sada, a consultant who specializes in advising customers on Google Cloud services, said a small majority of customers he talked to had favorable experiences with Gemini Enterprise, but “it’s close to 50-50 of customers who like it or don’t.”
In some cases, the success of Google’s Gemini models — which customers use to develop their own software — could hinder its ability to sell its software built on top of them, Margolis added.
Google’s business selling access to its models had a slow start, as the company’s early Gemini models were not particularly well-received. However, after Google released Gemini 2.5 last spring, to enthusiastic reviews from developers, the API sales increased.
Several customers, including staff at coding tool startup Cursor, wanted to use the Gemini API after the 2.5 release, so Google had to tweak how the model was delivered to make it more efficient. That adjustment freed up enough compute to accommodate the additional usage, the report noted, citing a separate person familiar with the situation.
Usage also increased after Gemini 3 was released in November last year, which also saw strong positive reviews, the report noted.
Over the past year, Google has worked to improve API margins. Google’s first Gemini models, Gemini 1.0 and Gemini 1.5, had negative profit margins, meaning they cost more to operate than Google charged due to heavy discounting, the report added.
Gemini 2 had positive margins only sometimes. Gemini 2.5 had positive margins, as the improved quality of the models meant Google could compete on quality, not just price, but even that only accounted for the cost of serving the tokens itself, not any of the costs that went into model development, according to the report.
As of the middle of 2025, Google’s blended Gemini margins — across all models — were barely positive, far below margins on Cloud as a whole, the report added.
The success of the Gemini API increased Google’s business beyond just direct API sales. Google calculated that spending on API calls also boosted spending on other Google Cloud products such as storage or databases, the report noted.
However, where Google still has work to do is in its software AI application suite, Gemini Enterprise. According to Margolis, the product has received mixed reviews all year from customers, the report added.