With Q2 Sales Growth of 82% and a Backlog of $514 Billion, Is Cloud Now a Bigger Growth Engine for Sundar Pichai's Alphabet Than Google's Search Business?

While most people know Google parent Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) is a key player in the artificial intelligence industry, most investors also know that search-based advertising -- via Google -- remains its bread-and-butter business.

Still, it's tough to ignore the fact that Google Cloud's sales are soaring. They rose 82% year over year to $24.8 billion during the second quarter, and plenty more cloud revenue is already lined up. CEO Sundar Pichai said during the Q2 conference call that Google Cloud's backlog of future business stood at $514 billion.

Is it time to rethink what Alphabet is? Not quite. But it wouldn't be wrong to put the possibility on your longer-term radar.

Google CEO Sundar Pichai. Image source: Alphabet.

If nothing else, faster growth

The graphics below tell the tale. Search advertising is by far still the company's single-biggest source of revenue, accounting for more than half of Q2's total top line of $119.8 billion (and more than two-thirds of the quarter's sales when counting YouTube and its ad business within Google's broader network). Cloud computing, conversely, accounted for roughly one-fifth of Alphabet's total revenue. But it's undeniable that cloud computing is the company's fastest-growing arm.

Data source: Alphabet. Chart by author.

Cloud computing -- where the company reports most of its artificial intelligence-related results -- is also growing its profitability at an even faster clip. While last quarter's cloud operating income of $8.8 billion was only slightly less than 22% of the company's total operating income of just under $40.8 billion, it was also up more than 200% from cloud-based operating income of $2.8 billion reported for the second quarter of 2025.

Data source: Alphabet. Chart by author. Note that the "other bets" and "corporate" segments, both of which routinely report operating losses, are excluded.

Moreover, another $514 billion worth of future cloud computing revenue has already been lined up. At its current pace, that's more than five years' worth of cloud sales just waiting to be booked.

Yes and no, but not the point either way

So in answer to the question, cloud still isn't anywhere near the profit center to Alphabet that Google search and its related/branded services are. However, cloud computing will likely account for a slight majority of the company's operating income growth for the foreseeable future.

Google Services' operating income improved by $6.5 billion year over year in Q2, for perspective, while Google Cloud's grew by $6 billion. With its cloud arm now operating at scale and its profit margins widening at a brisk pace, continued strength in artificial intelligence promises a major positive impact on net profit growth from here.

Just don't get so enamored by the specific numbers that you lose sight of the bigger picture. That is, Alphabet remains an incredible growth stock precisely because it's a leading name on multiple fronts. And it would be a promising investment even if its AI-led cloud business wasn't making quite as big an impact on its top- and bottom-line growth.

James Brumley has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.