The 1 Number That Shows Why Alphabet Is a Buy Today

"In the competitive tech stock landscape, Alphabet ( NASDAQ:GOOG ) stands out because of its diverse revenue streams, from search advertising to cloud computing. While its third-quarter earnings report last week gave its stock a boost, one number stood out in a report full of positive news: Google Cloud's backlog surged to $155 billion - up almost $50 billion sequentially, marking a 46% increase quarter-over-quarter and 82% year-over-year."

"Backlog, or RPO, measures the total value of contracted revenue that a company expects to recognize in the future. For Google Cloud, this includes subscriptions, usage-based fees, and long-term deals for services like computing power, storage, and AI tools. The $155 billion total breaks down into current RPO (expected within the next year) and non-current (beyond that). Alphabet expects to recognize 55% of the total within the next two years."

"The third-quarter surge was fueled by multi-year contracts with large enterprises adopting Google Cloud's AI infrastructure , such as Gemini models and Vertex AI platform. CEO Sundar Pichai said the Gemini App now has over 650 million monthly active users, and queries tripled from Q2. This isn't just a one-off; it's part of a trend where backlog has nearly doubled year-over-year, outpacing overall cloud revenue growth of 34% to $15.2 bill"

Google Cloud's backlog of remaining performance obligations reached $155 billion, an increase of almost $50 billion sequentially, representing a 46% quarter-over-quarter rise and 82% year-over-year growth. RPO captures contracted future revenue from subscriptions, usage-based fees, and long-term deals for computing, storage, and AI services. Alphabet expects to recognize 55% of the backlog within two years. Google Cloud holds a 13% market share while growing faster than AWS (29%) and Azure (20%). The quarterly surge was driven by multi-year enterprise contracts for AI infrastructure like Gemini models and the Vertex AI platform. Gemini App surpassed 650 million monthly active users and queries tripled from Q2. Backlog growth has nearly doubled year-over-year and exceeds overall cloud revenue growth of 34% to $15.2 billion.

Read at 24/7 Wall St.