Google Cloud's AI Startup Surge

Google Cloud has recently announced the addition of fast-rising AI coding startups Lovable and Windsurf to its customer roster. Both companies have selected Google Cloud as their primary cloud computing provider, signaling Google's growing prominence against larger rivals like AWS and Microsoft Azure.

These deals underscore Google's strategy to make its cloud business a central pillar of the company's future. Although Google Cloud is currently overshadowed by competitors and Google's dominant advertising arm, it is experiencing significant upward momentum.

Rapid Growth and Financial Highlights

Google Cloud is one of the company's fastest-growing business lines. In the latest earnings call, Google revealed that its cloud division has reached an annual run rate of $50 billion. Cloud chief Thomas Kurian projected an additional $58 billion in new revenue over the next two years. For context, Google generated $43.2 billion in cloud services in 2024 and $33.1 billion in 2023.

AI Startups as Key Drivers

Winning contracts with leading AI startups is a major factor in Google Cloud's expansion. The division now collaborates with nine out of the top 10 AI labs, including Safe Superintelligence and OpenAI, and supports 60% of the world's generative AI startups. Over the past year, there has been a 20% increase in new AI startups choosing Google Cloud.

While startups like Lovable and Windsurf (recently acquired by Cognition) currently have smaller spending compared to large enterprises, Google is betting on their future growth. These startups utilize Gemini 2.5 Pro to power their products, running on Google Cloud infrastructure. Windsurf also integrates Gemini models with Cognition's AI agent, Devin.

Cloud Market Trends and Challenges

The high costs associated with training, fine-tuning, and running AI models pose challenges for developers, including Google DeepMind with its Gemini models. However, this has been a boon for cloud providers. The global cloud market is expected to exceed $400 billion in 2025, with a growth rate of 20% over the next five years, according to Synergy Research.

Support and Incentives for Startups

Google Cloud attracts AI startups through generous offers, such as the Google for Startups Cloud Program, which provides $350,000 in cloud credits. Additionally, it offers a dedicated cluster of Nvidia GPUs for startups in the Y Combinator accelerator program.

At the recent Google AI Builder's Forum, the company announced over 40 new AI startups building on its platform, including Sequoia-backed Factory AI and Andreessen Horowitz-backed Krea AI.