Google Cloud revenue growth gets boost as Kurian cites higher client spending

Google Cloud revenue growth is getting a lift from existing customers spending more than they had already pledged, according to Google Cloud CEO Thomas Kurian. For investors watching Alphabet, that matters because cloud has become one of the clearest places to measure whether corporate demand for Google’s infrastructure and software is turning into sales growth.

Kurian told CNBC’s Jim Cramer on Thursday that current Google Cloud customers are spending “roughly 50% more” than the commitments they had made to the company. He said that higher spending helped drive growth in the cloud business during the second quarter.

CNBC reported that Google Cloud revenue rose 82% from a year earlier in the quarter. Year-over-year growth compares a period with the same period one year before, which helps investors see whether a business is expanding beyond seasonal swings.

Kurian attributed the performance to Google Cloud’s product lineup and sales execution. He told CNBC that the effect was showing up in both “top line” growth, meaning revenue, and operating income, which is profit from the business after operating costs but before items such as taxes and some other expenses.

Why is Google Cloud revenue growing so fast?

Kurian’s explanation centered on expansion inside accounts Google Cloud already has. In cloud computing, a customer commitment is an agreement to spend a certain amount over time; if customers use more computing power, storage, data tools, or other services than planned, their actual spending can rise above that committed level.

That kind of growth is closely watched because it can signal whether a cloud provider is deepening relationships with customers already on its platform. It can also be more efficient than depending only on new customer wins, though Kurian’s comments to CNBC did not break down how much of the quarter’s growth came from existing customers versus new ones.

For retail investors, the key takeaway is that Google Cloud’s growth was not described only as a broad market trend. Kurian pointed to customers who had already signed up for Google Cloud products and then spent materially above those commitments.

The cloud segment sits inside Alphabet, Google’s parent company. Cloud revenue is an important line item because it gives investors a separate view of how Google is competing beyond its core advertising business, particularly as companies spend on computing infrastructure and business software.

CNBC’s quote page showed Alphabet’s Class A shares, ticker GOOGL, down 7.45% at the time shown with the report. The move came as investors were also weighing Alphabet’s broader earnings picture and spending plans, according to CNBC’s related coverage.

Kurian’s comments gave investors a specific reason behind the cloud unit’s second-quarter momentum: customers were using and paying for more than they had initially committed to buy. The durability of that pattern will be the question investors follow in future Alphabet reports.

This story draws on original reporting from CNBC.