Google’s artificial intelligence model is set to drive $4.2 billion in subscription revenue within its Google Cloud segment in 2025, according to an analysis from Bank of America on Monday.
That includes $3.1 billion in revenue from subscribers to Google’s AI plans with its Google One service, Bank of America’s Justin Post estimates.
Post also expects that the integration of Google’s Gemini AI features within its Workspace service will drive $1.1 billion of the $7.7 billion in revenue he projects for that segment in 2025.
“We believe Google has moved beyond the catch-up phase in the LLM [large language model] race, with Gemini now comparing favorably with leading peer models from OpenAI, Anthropic, xAI, and Meta,” Post wrote, saying that AI is a “major growth driver for Google Cloud.”
But, Post added, “While the revenue opportunity is growing with subscriptions, Google will likely see a significant deterioration of market share relative to its ~90% share of search revenues.”
At the same time, Alphabet is set to spend $75 billion on AI investments in 2025.
“If revenue growth doesn’t keep pace with rising Capex, higher spending could weigh on free cash flow and margin projections,” Post wrote.
He holds a Buy rating and $200 price target on Alphabet (GOOGL, GOOG) shares.