It’s a sunny day for Google Cloud

Google Cloud, Google’s cloud computing division, had a blockbuster fiscal quarter, beating analysts’ expectations and sending shares of Google parent Alphabet up more than 13% in after-hours trading.

Google Cloud revenue jumped 28% to $9.57 billion in the first quarter of 2024, driven by demand for generative AI tools that leverage cloud infrastructure, services and applications. This continues a positive trend for the division, which in the previous quarter (Q4 2023) recorded year-on-year growth of 25.66%.

Google Cloud’s operating profit increased nearly 5-fold to $900 billion from $191 million. There’s no doubt that investors were thrilled with this news, as well as Alphabet’s first-ever dividend (of 20 cents per share) and a $70 billion stock repurchase program.

Elsewhere at Alphabet, revenue from Google search and others climbed 14.4% to $46.15 billion in the fiscal first quarter. YouTube’s revenue grew 20% year over year to $8.09 billion (a slight decline from Q4 2023 revenue of $9.2 billion), and the business Google’s overall advertising gained 13% year-over-year to reach $61.6 billion.

Alphabet’s Other Bets category, which includes the company’s autonomous vehicle subsidiary Waymo, was the big loser. Revenue rose 72% to $495 million in the first quarter, but other bets lost $1.02 billion, about the same as in the fourth quarter of 2023. (Other bets are not generally not profitable.)

Alphabet’s overall revenue was $80.5 billion, an increase of 15% year-on-year, with net profit of $23.7 billion (up 57%). Beyond Google Cloud’s performance, a reduction in headcount could have contributed to the winning quarter; Alphabet reported a 5% drop in its workforce, to 180,895 employees.

On a call with investors, Alphabet CEO Sundar Pichai said YouTube and Google’s cloud businesses are expected to grow to a combined annual run rate of more than $100 billion by the end of 2024. Last year, the divisions’ combined revenue was $64.59 billion, with Google Cloud bringing in $33.08 billion and YouTube generating $31.51 billion.

“Stepping back, it took Google over 15 years to reach $100 billion in annual revenue,” Pichai said. “In just the last six years, we have grown from $100 billion to over $300 billion in annual revenue… This shows our track record of investing and building new, successful growth businesses.