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Google's cloud business explodes and stock price plummets. Executives emphasize that cloud customer spending exceeds commitments by 50%

2026-07-25·newswire-us-stock-183219
Google's cloud business explodes and stock price plummets. Executives emphasize that cloud customer spending exceeds commitments by 50%.

Google Cloud CEO Thomas Kurian said that the company's existing customers' actual spending on using Google Cloud products is on average about 50% higher than the amount they committed, which has become an important factor in driving Google Cloud's rapid business growth in the second quarter.

Kurian said in an interview on Thursday (July 23): "Our existing customers will further increase their spending after making purchase commitments to us.

Their actual spending is about 50% higher than the promised amount." "This reflects the differentiated advantages of our product portfolio, as well as improved market expansion and sales execution capabilities, which are also reflected in the growth of revenue and operating profit." The day before, Alphabet, Google’s parent company, released second-quarter results that were better than market expectations.

Cloud business revenue increased by 82% year-on-year, becoming the main driving force for overall revenue to exceed expectations. As the demand for cloud services continues to be strong, Google plans to rent computing power from third-party cloud service providers to supplement its own production capacity.

This news drove the share prices of "Neocloud" service providers CoreWeave and Nebius to rise. Kurian said that although renting external computing power will put some pressure on profit margins, this strategy helps meet customer needs, and these new customers will often further purchase other Google products and services in the future.

"In the short term, we will rent some computing power in the next few quarters. This allows us to attract customers first and meet their needs before our own capacity is sufficient." "These customers continue to contribute more business over time, so from a return on investment perspective, it makes sense," Kurian said.

Although the growth rate of its cloud business exceeded expectations, the stock price of Alphabet Class A shares (GOOGL) fell more than 7% during the session on Thursday because the company raised its full-year capital expenditure forecast to a maximum of 205 billion U.S. dollars, causing investors to worry about the continued expansion of AI investment.

Alphabet said in its financial report that the company expects capital expenditures in 2026 to be between US$195 billion and US$205 billion, higher than the US$180 billion to US$190 billion expected in the previous quarter.

Capital expenditures in the second quarter reached US$44.9 billion, the vast majority of which was used for AI infrastructure construction. In this regard, Kurian said that the company has always maintained "very, very strict discipline" in investment and emphasized that more and more companies have obtained actual benefits from Google AI solutions.

"For example, after Macy's deployed our AI system, the average shopping basket size of customers increased.

In addition, Macquarie Bank significantly shortened business processing time by automating a large number of internal workflows." Currently, technology giants are investing huge sums of money to build AI infrastructure, while trying to prove to Wall Street that these investments can ultimately bring significant returns.

Before Alphabet released its financial report, the market expected that large technology companies such as the "Big Seven" would spend a total of about $725 billion on AI-related projects this year. Amazon, Microsoft and Meta will release their financial reports next week, and this number is expected to rise further.

#Stocks #Microsoft #Meta #Amazon #Google #GOOGL

Full text

Google's cloud business explodes and stock price plummets. Executives emphasize that cloud customer spending exceeds commitments by 50%

Google Cloud CEO Thomas Kurian said that the company's existing customers' actual spending on using Google Cloud products is on average about 50% higher than the amount they committed, which has become an important factor in driving Google Cloud's rapid business growth in the second quarter. Kurian said in an interview on Thursday (July 23): "Our existing customers will further increase their spending after making purchase commitments to us. Their actual spending is about 50% higher than the promised amount.

Google Cloud CEO Thomas Kurian said that the company's existing customers' actual spending on using Google Cloud products is on average about 50% higher than the amount they committed, which has become an important factor in driving Google Cloud's rapid business growth in the second quarter. Kurian said in an interview on Thursday (July 23): "Our existing customers will further increase their spending after making purchase commitments to us. Their actual spending is about 50% higher than the promised amount." "This reflects the differentiated advantages of our product portfolio, as well as improved market expansion and sales execution capabilities, which are also reflected in the growth of revenue and operating profit." The day before, Alphabet, Google’s parent company, released second-quarter results that were better than market expectations. Cloud business revenue increased by 82% year-on-year, becoming the main driving force for overall revenue to exceed expectations. As the demand for cloud services continues to be strong, Google plans to rent computing power from third-party cloud service providers to supplement its own production capacity. This news drove the share prices of "Neocloud" service providers CoreWeave and Nebius to rise. Kurian said that although renting external computing power will put some pressure on profit margins, this strategy helps meet customer needs, and these new customers will often further purchase other Google products and services in the future. "In the short term, we will rent some computing power in the next few quarters. This allows us to attract customers first and meet their needs before our own capacity is sufficient." "These customers continue to contribute more business over time, so from a return on investment perspective, it makes sense," Kurian said. Although the growth rate of its cloud business exceeded expectations, the stock price of Alphabet Class A shares (GOOGL) fell more than 7% during the session on Thursday because the company raised its full-year capital expenditure forecast to a maximum of 205 billion U.S. dollars, causing investors to worry about the continued expansion of AI investment. Alphabet said in its financial report that the company expects capital expenditures in 2026 to be between US$195 billion and US$205 billion, higher than the US$180 billion to US$190 billion expected in the previous quarter. Capital expenditures in the second quarter reached US$44.9 billion, the vast majority of which was used for AI infrastructure construction. In this regard, Kurian said that the company has always maintained "very, very strict discipline" in investment and emphasized that more and more companies have obtained actual benefits from Google AI solutions. "For example, after Macy's deployed our AI system, the average shopping basket size of customers increased. In addition, Macquarie Bank significantly shortened business processing time by automating a large number of internal workflows." Currently, technology giants are investing huge sums of money to build AI infrastructure, while trying to prove to Wall Street that these investments can ultimately bring significant returns. Before Alphabet released its financial report, the market expected that large technology companies such as the "Big Seven" would spend a total of about $725 billion on AI-related projects this year. Amazon, Microsoft and Meta will release their financial reports next week, and this number is expected to rise further.

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