Cloud computing

AI investments lift Alphabet despite cloud slowdown

Alphabet’s shares climbed over 5% in premarket trading after the company reported strong earnings that reassured investors of its AI strategy.

Despite a slight deceleration in advertising and cloud growth, Google’s parent company beat expectations, signalling that its major bets on artificial intelligence are starting to pay off.

Advertising revenue, which forms the backbone of Alphabet’s business, rose 8.5% in the first quarter to $66.89 billion—outperforming analyst projections.

Although this marks a slowdown from the previous quarter’s growth, it reinforces investor confidence in Alphabet’s ability to monetise AI across its services. Meanwhile, Google Cloud revenue grew by 28%, falling just short of forecasts and indicating some cooling in the segment.

The company is pressing ahead with its ambitious infrastructure plans, reaffirming a $75 billion investment in expanding data centre capacity.

Alongside Microsoft’s even larger plans, these efforts contribute to Big Tech’s anticipated $320 billion AI investment in 2025. However, growing trade tensions and fears of an economic downturn have led to questions about the sustainability of such capital spending.

While Alphabet remains a key player in the AI race, legal challenges loom large. Ongoing antitrust actions in the United States could compel the company to divest core assets like Chrome, as regulators seek to limit Google’s market dominance.

Nevertheless, many analysts remain optimistic, with several brokerages raising their price targets, pointing to Alphabet’s ability to deliver GenAI-powered products at scale despite headwinds.

Would you like to learn more about AI, tech and digital diplomacy? If so, ask our Diplo chatbot!

Google boosts AI in coding and cloud growth

More than 30% of all code at Google is now written with the help of AI, according to CEO Sundar Pichai during Alphabet’s Q1 2025 earnings call.

Developers are embracing AI-generated suggestions in nearly one out of every three code changes, thanks to improved models and the rollout of agentic workflows—AI systems designed to manage complex, multi-step tasks.

Pichai noted that AI-assisted coding is expanding across the company, with customer service teams leading the way in adoption.

Alphabet reported strong financial results, with quarterly revenue climbing 12% year-over-year to $90.2 billion. Net income rose sharply by 46% to $34.5 billion, and earnings per share jumped 49%.

While there was a slight quarterly dip in revenue from the previous quarter, Google’s core advertising business, YouTube, and Google Cloud all contributed to year-on-year growth. Cloud revenue, in particular, increased 28% due to surging demand for AI and infrastructure products.

The recently released Gemini 2.5 Pro model was described by Pichai as ‘state-of-the-art’, outperforming rivals across benchmarks and landing the top spot on Chatbot Arena. Gemini models are now integrated across 15 Google products used by more than half a billion people.

Features like Gemini Live and AI-powered camera tools are being rolled out on Android and Pixel devices, while Google Assistant will also receive a Gemini upgrade later this year.

Instead of slowing down, Google is accelerating its AI development with initiatives like Gemini Robotics Models, the AI Co-Scientist for research, and the continued success of AlphaFold, used by over 2.5 million scientists.

With over 200% growth in users of AI Studio and Gemini API, and more than 140 million downloads of Gemma models, Google is clearly positioning AI at the centre of its future across products, platforms, and research.

Would you like to learn more about AI, tech and digital diplomacy? If so, ask our Diplo chatbot!

Lenovo unveils compact edge AI server

Lenovo has introduced the ThinkEdge SE100, a compact AI inferencing server aimed at bringing edge AI within reach for businesses of all sizes.

Rather than relying on large data centres for processing, this server is designed to operate on-site in space-constrained environments, allowing data to be processed locally instead of being sent to the cloud.

The SE100 supports hybrid cloud deployments and is part of Lenovo’s new ThinkSystem V4 family. While the V4 systems are built for AI training, the SE100 is intended for inferencing, which is less demanding and doesn’t require power-hungry GPUs.

Lenovo says the unit is 85% smaller than a typical 1U server and draws under 140W, even with GPU configurations.

Engineered to be both energy-efficient and quiet, the SE100 uses Neptune liquid cooling instead of traditional fans, making it suitable for public spaces. Its design also helps extend system health and lifespan by reducing air flow needs and lowering operating temperatures.

Lenovo’s vice president of infrastructure products, Scott Tease, stated the SE100 is a cost-effective solution that simplifies AI deployment at the edge.

Its flexible design adapts to diverse business needs, offering low-latency, high-performance inferencing without the complexity or expense of full-scale AI infrastructure.

For more information on these topics, visit diplomacy.edu.

EU prepares new data strategy for AI growth

The European Commission will soon launch a consultation on its upcoming Data Union Strategy, a key part of efforts to boost Europe’s leadership in AI.

The strategy, set to be published by the end of the year, aims to make it easier for businesses and public bodies to share data securely and efficiently across the EU.

The initiative supports the broader AI Continent Action Plan, expected to be unveiled this week, which seeks to encourage faster adoption of AI technologies by European companies.

Instead of relying on fragmented systems, the Commission wants to improve data access, digital infrastructure, and cloud capabilities while investing in talent and streamlining complex processes.

The plan includes the creation of AI factories where companies can train models using EU-based resources, and a separate Cloud and AI Development Act later this year will promote energy-efficient investments to support these goals.

Public feedback on the Data Union Strategy will be gathered from April to June as part of the consultation process.

Despite the ambition, the Commission acknowledges ongoing concerns such as uncertainty around international data flows and challenges accessing suitable data for generative AI.

Strict privacy laws like the GDPR, instead of enabling wider AI training, have led to frustration from major tech firms over regulatory delays in Europe.

For more information on these topics, visit diplomacy.edu.

Microsoft pauses $1 billion data centre project in Ohio

Microsoft has announced it is ‘slowing or pausing’ some data centre construction projects, including a $1 billion plan in Ohio, amid shifting demand for AI infrastructure.

The company confirmed it would halt early-stage development on rural land in Licking County, near Columbus, and will repurpose two of the sites for farmland.

The decision follows Microsoft’s rapid scaling of infrastructure to meet the soaring demand for AI and cloud services, which has since softened. The company acknowledged that such large projects require continuous adaptation to align with customer needs.

While Microsoft did not specify other paused projects, it revealed the suspension of later stages of a Wisconsin data centre expansion.

The slowdown also coincides with changes in Microsoft’s partnership with OpenAI, with the two companies revising their agreement to allow OpenAI to build its own AI infrastructure. This move reflects broader trends in AI computing needs, which are expensive and energy-intensive.

Despite the pause in Ohio, Microsoft plans to invest over $80 billion in AI infrastructure this fiscal year, continuing its global expansion, though it will now strategically pace its growth to align with evolving business priorities.

Local officials in Licking County expressed their disappointment, as the area had been a hub for significant tech investments, including those from Google and Meta.

For more information on these topics, visit diplomacy.edu.

Minister urges Indian start-ups to shift focus from ice cream to semiconductors

India’s Commerce Minister Piyush Goyal has sparked controversy by questioning whether Indian start-ups should focus on semiconductor chips instead of gluten-free ice creams and food delivery apps.

Speaking at a start-up conference, he compared India’s consumer internet boom unfavourably with China’s advances in robotics and AI, urging entrepreneurs to pursue more ambitious tech innovations instead of safe lifestyle products.

While acknowledging the position of India as the world’s third-largest start-up ecosystem, Goyal faced pushback from founders who argued consumer apps often evolve into tech pioneers.

Quick-commerce CEO Aadit Palicha noted that companies like Amazon began as consumer platforms before revolutionising cloud computing. However, investors admitted deep-tech struggles for funding, with most capital chasing quick-return ventures instead of long-term hardware or AI projects.

The debate highlights India’s innovation crossroads. Despite having 4,000 deep-tech start-ups, projected to reach 10,000 by 2030, they attracted just 5% of 2023 funding instead of China’s 35%.

Experts suggest the government could help by offering tax incentives instead of criticism, and building research bridges between academia and start-ups to compete globally in advanced technologies

For more information on these topics, visit diplomacy.edu.

Amazon’s Nova Reel can now generate two-minute AI videos

Amazon has enhanced its generative AI video tool, Nova Reel, with an update that allows for the creation of videos up to two minutes long.

The updated model, Nova Reel 1.1, supports multi-shot video generation with a consistent style and accepts detailed prompts of up to 4,000 characters.

A new feature called Multishot Manual gives users more creative control, combining images and short prompts to guide video composition. However, this mode supports up to 20 shots from a single 1280 x 720 image and a 512-character prompt, offering finer-tuned outputs.

Nova Reel is currently accessible through Amazon Web Services (AWS), including its Bedrock AI development suite, although developers must request access, which is automatically granted.

The model enters a competitive field dominated by OpenAI, Google, and others racing to lead in generative video AI.

Despite its growing capabilities, Amazon has not disclosed how the model was trained or the sources of its training data. Questions around intellectual property remain, but Amazon says it will shield customers from copyright claims through its indemnification policy.

For more information on these topics, visit diplomacy.edu.

Deutsche Telekom expands partnership with Google Cloud

Deutsche Telekom has strengthened its collaboration with Google, moving more of its services to the Google Cloud platform as part of its transformation into an ‘AI-first company.’ The expanded partnership aims to improve the agility and efficiency of Deutsche Telekom’s operations through AI-driven solutions.

Stefan Schloter, Chief Infrastructure Officer for Europe at Deutsche Telekom, highlighted how leveraging data and AI will enhance digital solutions across business entities, software engineering, and customer interfaces.

The MyMagenta app, for example, will integrate Google’s AI-powered Gemini assistant, further improving customer experience.

Google Cloud will also serve as the technical foundation of Deutsche Telekom’s new AI platform, the ‘One Data Ecosystem.’ However, this platform consolidates data systems and enhances data processing speed while ensuring compliance with privacy and data-sharing regulations.

Marianne Janik, Vice President of Google Cloud for Northern Europe, expressed excitement about the partnership, noting how cloud technology is pivotal for communications providers in driving innovation, flexibility, and growth for enhanced user experiences.

For more information on these topics, visit diplomacy.edu.

Microsoft rethinks AI data centre strategy amid market shifts

Microsoft has reportedly scaled back or delayed several major data centre projects, just three months after announcing plans to invest $80 billion in AI infrastructure through the current fiscal year.

According to Bloomberg, the company has paused developments in multiple locations, including Australia, Indonesia, the United Kingdom, and US states such as Illinois, North Dakota, and Wisconsin.

Instead of denying the report, Microsoft confirmed adjustments to its plans, citing the need for long-term flexibility. A spokesperson said the company continuously reviews future infrastructure needs to ensure alignment with growing AI demand, adding that the changes reflect Microsoft’s adaptable strategy.

The halted projects include negotiations for high-performance AI chip facilities in the UK and a site near Chicago, along with construction delays in Jakarta and Wisconsin.

These moves come amid growing scrutiny over whether the AI sector is entering a bubble, especially as emerging models challenge the assumption that vast computing power is always necessary for innovation.

Instead of sticking to high-cost development, Microsoft may be responding to a new trend: efficient, lower-cost AI models from Chinese firms that rival those of Western tech giants.

With AI development costs dropping and access expanding, Microsoft’s strategic pause could reflect a shift towards a more sustainable and agile future in AI infrastructure.

For more information on these topics, visit diplomacy.edu.

India’s Gen AI market to drive data centre growth

India’s Generative AI sector is poised for rapid growth over the next five years, driving an increased demand for data centres, according to a report by ANAROCK.

The market size of Gen AI in India is projected to rise from USD 1.1 billion in 2025 to USD 6.4 billion by 2030, expanding at a compound annual growth rate of 42 per cent.

The surge will require advanced infrastructure, with data centres playing a key role in managing computing power, storage, and data processing needs.

As AI-driven applications become more sophisticated, data centre operators are adapting their strategies to accommodate rising infrastructure demands.

The push for real-time AI applications will also drive the need for edge data centres, particularly in Tier-II cities like Jaipur, Ahmedabad, and Visakhapatnam, bringing computing closer to users and improving efficiency.

With the expansion of India’s data centre industry, there is a growing focus on sustainability and energy efficiency. Operators are increasingly relying on renewable energy sources and adopting energy-efficient solutions to meet rising power demands while aligning with India’s sustainability goals.

Over the past decade, the sector has attracted over USD 6.5 billion in investments, benefiting from infrastructure status that facilitates easier project financing.

With continued interest from global investors, India’s data centre industry is set for exponential growth, playing a crucial role in the country’s digital transformation.

For more information on these topics, visit diplomacy.edu.