Written by: Rita

Google Cloud CEO Thomas Kurian revealed at the Communacopia conference that Google Cloud already has 17 product lines with annual revenues exceeding $1 billion, and new customer acquisition has grown more than 2 times year-on-year and quarter-on-quarter, with transactions exceeding $100 million also increasing by over 2 times. On September 8, Goldman Sachs released a report on key points from the Alphabet conference, indicating that Google Cloud is establishing differentiated competitiveness in the AI and cloud computing markets with its vertically integrated AI technology stack, covering chips, models, security, and applications. Goldman Sachs maintains a buy rating with a target price of $435, implying an upside of about 28.5% from the current stock price.

Kurian emphasized that regardless of whether customers choose to adopt Google Cloud end-to-end or deploy within a single product category, Google Cloud's differentiated approach can compete across the complete AI and cloud technology stack. The monetization paths for AI and TPU have formed a clear framework, including various models such as subscriptions, hardware procurement, and partner delivery.

Platform and Infrastructure: Advantages of Vertical Integration

The management team at Google Cloud emphasized the advantages of its vertically integrated technology stack. From proprietary infrastructure, chips, models, security to applications, Google Cloud has built a complete closed loop of AI capabilities. At the AI infrastructure level, it provides various accelerators to accommodate different model architectures and workloads, optimizing independent systems for training and inference.

Google Cloud has 17 product lines with annual revenues exceeding $1 billion, covering a complete product matrix from computing, storage, databases to AI platforms. The breadth of the product lines provides a foundation for cross-selling, with AI customers using an average of 1.8 times more Google Cloud products than non-AI customers.

Gemini Enterprise: Accelerating Enterprise Adoption

Gemini Enterprise is evolving from an AI assistant into an inference and automation platform, helping customers analyze data, automate workflows, write code, and enhance cybersecurity. About 80% of Google Cloud customers use AI products, and about 90% of Fortune 100 companies use both Gemini Enterprise and Google Cloud security services.

The estimated 5-year lifecycle value of Gemini Enterprise customers is about 1.5 times higher than that of non-Gemini customers. AI customers use an average of 1.8 times more Google Cloud products than non-AI customers. This data validates the value of AI as a platform adhesive; AI not only directly generates revenue but also expands overall wallet share by increasing customers' depth of use of cloud products.

TPU Monetization Paths are Multiple and Parallel

Google Cloud discussed various deployment and monetization models for TPU. The traditional cloud subscription model is the main path, where customers rent TPU computing power as needed. The direct hardware procurement model allows customers to deploy TPU in their own data centers, generating upfront hardware revenue and locking in long-term customer relationships. The delivery model through neocold partners has expanded market coverage.

On-site deployment models can create attractive free cash flow characteristics while locking in long-term customer commitments through multi-year contracts. The combination of various monetization paths enables Google Cloud to find optimal delivery and pricing methods among different customer groups to maximize TPU's financial returns.

Partner Ecosystem: Scaling AI Adoption

Google Cloud's frontline deployment engineering team focuses on three directions. Collaborating with leading clients across various industries to identify frontier use cases. Building tools and capabilities to drive model performance and business outcomes. Co-developing training and certification programs with partners to scale AI adoption.

Partners emphasize specific solutions across 8 vertical industries, expanding the service ecosystem through partnerships, and integrating specialized datasets into AI workflows. Google Cloud is building a complete partner network covering industry solutions, system integrators, and data ecosystems.

Valuation and Risks

Goldman Sachs maintains a buy rating on Alphabet with a 12-month target price of $435, based on an equal-weight mixed valuation approach of EV/GAAP EBIT and adjusted DCF. The current stock price is about $338, implying about 28.5% upside potential.

Downside risks include six aspects. Product competitiveness and advertising share competition. The search business faces headwinds from industry transformations. Changes in media consumption habits. Investment levels consistently exceeding expectations suppressing profit margins. Insufficient shareholder returns. Regulatory scrutiny on potential impacts to business models. Alphabet also faces volatility risks from changes in the macroeconomic environment and investor risk preferences.

Disclaimer

This article is a整理与解读 of the third-party brokerage research report (Goldman Sachs, September 8, 2026) by潮向研究, combined with整理 of public market information. The ratings, target prices, earnings forecasts, and related judgments quoted in this article are the views of the brokerage analysts and represent their respective institutions’ positions, not those of潮向研究, nor does it constitute any investment advice.

The market has risks, and decisions must be made independently. This article should not be used as the basis for buying or selling any securities.