Alphabet’s AI Risk Extends Beyond $1 Trillion, Filing Shows

Alphabet Inc. has said demand for its cloud services is increasing at a rapid clip, pointing to growth in its backlog, or cloud contracts it hasn’t yet fulfilled. However, more than a third of that quarterly growth comes from a joint venture the company partly owns.

The revelation appeared in a quarterly filing on Thursday that outlined exposures to artificial intelligence risk that go beyond what Alphabet discussed during its earnings call the previous day.

Besides the $1 trillion-plus in purchase commitments, future leases and other obligations disclosed by Chief Financial Officer Anat Ashkenazi on an investor call, the filing lists about $98.5 billion in contingent commitments the company could be on the hook for under certain conditions. That’s up roughly $23 billion from one quarter ago.

These commitments include guaranteeing data center lease payments, backing partners’ purchases of power equipment and a potential obligation to buy back AI chip systems from customers.

Google Cloud’s backlog of contracts rose to $560.8 billion at the end of September, from $513.9 billion three months earlier. Of that, $16.8 billion is tied to a multiyear agreement with Crux AI, a venture Alphabet formed with Blackstone Inc. that the filing describes as a related party. Alphabet holds a minority stake in the entity and has pledged up to $10 billion in data center and energy backstops to support it.

Read More: Google Erases a Record $500 Billion as AI Eats Into Sales

The filing also shows signs of strain in the business that funds the company’s AI build-out. Paid clicks on Google Search grew 8% in the third quarter, down from 13% in the second period, even as Chief Executive Officer Sundar Pichai said query growth was the fastest it has been in five years.

On the call, Chief Business Officer Philipp Schindler said strong growth in AI Mode queries had an impact on revenue because of “the lower monetization” of those queries — though he noted that the company was optimistic and is expanding ads in AI Mode, including to international markets for the first time.

The company declined to comment.

The filing also revealed:

Alphabet for the first time said its autonomous agents have sometimes taken actions “outside of their intended scope” during model testing — just as the company is preparing to roll agents out to the Gemini app’s 1 billion users.Despite their loss in value this quarter, SpaceX shares make up a big piece of the company’s cash pile. Fully $75.2 billion of Alphabet’s $265.1 billion in cash and marketable securities is SpaceX stock with short-term sale restrictions.Alphabet’s Anthropic stake is still growing, but more slowly. The company’s private holdings, mostly a stake that Bloomberg has identified as Anthropic, produced about $3 billion in paper gains last quarter, down from $77.4 billion in the second quarter.Energy guarantees more than doubled to $16.2 billion. Google is essentially cosigning for partners buying expensive power equipment for its data centers. The terms now run through January 2049, compared with a September 2026 date cited in June.Alphabet may have to buy back as much as $6.6 billion of AI chip systems it sold. Some customers can return Google’s TPU systems at a pre-set, discounted price, though Alphabet says customers have no incentive to do so.