Google Cloud revenue growth accelerates as Kurian cites higher customer spend

Google Cloud revenue growth in the second quarter was supported by existing customers spending about 50% more than they had committed to, Google Cloud CEO Thomas Kurian told CNBC on Thursday. The cloud segment’s revenue rose 82% from a year earlier, according to CNBC, underscoring the continued importance of cloud services within Alphabet’s business.

Kurian said in an interview with CNBC’s Jim Cramer that customers who make spending commitments to Google Cloud are using more of the company’s products than the minimum amount covered by those agreements. He attributed the higher usage to Google Cloud’s product portfolio and sales execution, and said the pattern is visible in both revenue and operating income growth.

Alphabet shares were shown down 7.45% in CNBC market data accompanying the report. The move came as investors continued to assess the earnings impact of artificial intelligence-related spending across large technology companies, though Kurian’s comments focused specifically on customer demand inside Google Cloud.

Why is Google Cloud revenue growing?

Kurian told CNBC that the main driver was greater spending by existing customers after they had already committed to use Google Cloud products. In cloud computing, a customer commitment generally sets a contracted spending level over a period; spending above that level indicates additional usage or adoption beyond the original agreement.

That mechanism matters for a cloud provider because revenue is tied closely to consumption. When companies run more workloads, store more data or use additional software and infrastructure services, their bills can rise even without a new customer relationship being formed.

Kurian said customers are spending “roughly 50% more” than their commitments. He linked that increase to what he described as differentiation in Google Cloud’s products and strength in the company’s go-to-market execution.

What did Kurian say about customer commitments?

Kurian told CNBC that existing customers have increased spending when they commit to Google Cloud. His comments suggest that the company is seeing expansion within its installed base, rather than relying only on new customer wins to lift the segment’s revenue.

The report did not provide a breakdown of which products accounted for the additional spending or disclose the size of the customer commitments. It also did not give a separate operating income figure for the quarter, although Kurian said the increased spending was reflected in operating income growth as well as top-line expansion.

Google Cloud competes in a global market for enterprise computing infrastructure and software services, where large corporate and public-sector customers often sign multiyear agreements with major providers. For Alphabet, the second-quarter cloud performance adds to investor scrutiny of how quickly spending on data centers, artificial intelligence and cloud infrastructure is translating into revenue.

This story draws on original reporting from CNBC.