Morgan Stanley Predicts 50% Growth for Google Cloud in 2026
Google Cloud could experience a major surge next year, with Morgan Stanley forecasting that the platform’s revenue may expand by more than 50% in 2026.
In a new investor note, Morgan Stanley analyst Brian Nowak said the firm’s updated backlog model “outlines a path to 50%+ Google Cloud revenue growth in 2026,” suggesting “mid-single-digit upside for us and over 15% upside versus Street estimates.”
Nowak emphasized that Google Cloud remains a key driver of Alphabet’s overall growth, adding that it continues to support valuation expansion and AI-driven outperformance for the tech giant.
Google Cloud Revenue Drivers
Morgan Stanley’s new forecast divides Google Cloud’s revenue between backlog commitments and on-demand workloads. According to Alphabet’s third-quarter 2025 results, around 55% of its $158 billion backlog is expected to convert into revenue within the next two years.
Historically, this backlog has accounted for 45–50% of Google Cloud’s total revenue, while on-demand workloads have shown strong momentum — rising 29% in 2023, 37% in 2024, and about 25% year-to-date in 2025.
Outlook for 2026
Based on these trends, Morgan Stanley’s sensitivity analysis projects that if Google adds approximately $50 billion or more in net backlog during 2026 and the on-demand business expands by at least 15%, total cloud revenue could surpass 50% growth.
Even under more conservative conditions — with 25% annual growth in on-demand services and a $20 billion increase in backlog — the model still supports a 50%+ revenue expansion for Google Cloud.
Morgan Stanley’s bullish outlook reinforces investor optimism that Alphabet’s cloud segment will remain a key growth engine in the company’s broader AI and enterprise strategy.
