Morgan Stanley analysts believe Google Cloud could experience a sharp acceleration in growth next year, forecasting that the platform’s revenue may expand by more than 50% in 2026.
In a recent note to clients, Morgan Stanley’s Brian Nowak wrote that the firm’s revised backlog model “outlines [a] path to 50%+ Google Cloud revenue growth in ’26,” adding that this represents “mid single digit+ % upside to us and 15%+ upside to Street.”
Nowak emphasized that the bank continues to view Google Cloud as “a driver of GOOGL multiple expansion and AI-driven outperformance.”
The updated model divides Google Cloud’s revenue streams between backlog and on-demand workloads. According to Alphabet’s latest disclosure, “~55% of its $158bn backlog in 3Q25 is expected to be recognized as revenue in the next 2 years.”
Historically, that backlog has accounted for “45-50% of Google Cloud revenue,” with the balance coming from on-demand services, which Morgan Stanley noted have increased “29%/37% y/y in ’23/’24” and roughly “25% YTD in ’25.”
Based on these growth dynamics, Morgan Stanley’s sensitivity analysis suggests that if Google adds approximately “$50bn+ in net backlog in ’26” and the on-demand segment expands 15% or more, total cloud revenue growth could surpass 50%.
Even under more conservative scenarios—“25% Y/Y growth in on demand” and a “$20bn step-up in backlog”—Nowak said the model “still supports 50 percent-plus growth.”