December 19, 2025 – San Francisco – Google Cloud, the cloud computing unit of Alphabet Inc (GOOGL.O), and cybersecurity leader Palo Alto Networks (PANW.O) have announced an expanded partnership, in what sources describe as Google Cloud’s largest security services contract to date. According to a person with direct knowledge, the multi-year agreement involves Palo Alto committing nearly $10 billion to Google Cloud, underscoring the growing importance of cloud-based security in the era of artificial intelligence (AI).

Overview of the Deal

The deal involves:

• Migrating Palo Alto Networks’ existing cybersecurity offerings to Google Cloud’s platform
• Developing new AI-driven security services for enterprise customers
• Strengthening Google Cloud’s position against hyperscaler rivals, including Amazon Web Services (AWS) and Microsoft Azure

While executives from both companies declined to confirm the contract’s exact financial terms, sources say that a significant portion of the funding will support AI-enhanced cybersecurity solutions.

AI Driving Demand in Cybersecurity

The rapid adoption of AI has created new security challenges and opportunities:

• Cyberattacks increasingly leverage generative AI tools, necessitating advanced defenses
• Enterprises are investing heavily in cloud security software to safeguard AI applications
• Google Cloud acquired Wiz for $32 billion (pending regulatory approval), while Palo Alto introduced AI-driven services in October and announced the $3.35 billion acquisition of Chronosphere last month

“AI has spawned a tremendous amount of demand for security,” said Matt Renner, Chief Revenue Officer for Google Cloud. BJ Jenkins, President of Palo Alto Networks, noted that cybersecurity remains in its early stages even as AI fundamentally reshapes technology infrastructure.

Strategic Partnership Background

Google Cloud and Palo Alto Networks have maintained a strategic partnership since 2018, leveraging complementary expertise in cloud computing and cybersecurity. Palo Alto CEO Nikesh Arora previously served as Google’s Chief Business Officer until 2014, reinforcing strong executive ties between the two firms.

This deal marks a critical milestone for Google Cloud as it positions itself as a leader in AI-powered security services, an increasingly vital segment as organizations expand AI integration in enterprise operations.

Market Implications

The $10 billion agreement:

• Demonstrates robust enterprise demand for AI-driven cybersecurity
• Highlights Google Cloud’s commitment to expanding security infrastructure to compete with AWS and Microsoft Azure
• Reinforces Palo Alto Networks’ strategy to integrate AI capabilities across its product offerings

With AI reshaping both software development and cybersecurity landscapes, the partnership is poised to set new standards for cloud security and enterprise AI protection globally.