CEO Sundar Pichai has confirmed that the company is forgoing short-term Google Cloud revenue by directing some of its limited computing capacity toward developing advanced AI models. Google is giving its AI researchers priority over cloud customers. The decision comes as demand for Google’s cloud services continues to rise and some customers struggle to secure additional capacity.
Google Cloud generated $24.8 billion in second-quarter revenue, up 82% from a year earlier, while its contracted backlog reached about $514 billion. Pichai said Gemini 4 Argon processed almost 25 trillion tokens in its first 72 hours, about three times what Gemini 3 handled over the same period.
However, Pichai said the company must maintain enough computing power for Google DeepMind’s research, and its other businesses must plan around that need. Frontier AI refers to the development of models that aim to reach the highest level of current capabilities. These systems require massive computing power to train and run, creating competition between Google’s internal research and paying cloud customers. Pichai described access to computing power for Google DeepMind as “non-negotiable. He argued that developing advanced models gives Google an early view of new AI abilities and helps the company prepare products for future uses. Pichai rejected suggestions that Google should focus only on smaller, less expensive models such as Gemini Flash. Demand is also coming from Google’s own products. He added that Google was already capacity-constrained while serving the model.