The Amazon Web Services logo at the Web Summit in Lisbon.
Henrique Casinhas | Sopa Images | Lightrocket | Getty Images
The cloud computing market continues to grow as companies move more and more workloads out of their own data centers, but executives at a major cloud vendor this week are looking for ways clients can cut costs. said.
As a result, revenue growth in the cloud sector has slowed. Amazon, microsoft and GoogleAnd for Amazon Web Services, a leader in this space, it means lower operating margins and lower profits for its parent company.
This is a phenomenon that began in 2022 as fears of a recession hit the economy. AWS saw a slowdown in the third and fourth quarters, and last quarter her Microsoft finance chief Amy Hood surprised analysts with a comment that she had expected the slowdown to continue in December. rice field.
Amazon’s head of finance Brian Olsavsky gave investors bad news on Thursday, saying AWS revenue growth slowed about 5% in April from nearly 16% growth in the first quarter. I was. As a result, the company’s stock price fell.
“Companies remain cautious about their spending during this uncertain time,” said Amazon CEO Andy Jassy.
At Google, Q1 cloud growth slowed to 28% from 32% a year ago. The slowdown also came when Google’s cloud segment achieved profitability for the first time on record.
Ruth Porat, Alphabet’s chief financial officer, said on Tuesday’s earnings call that “consumers are serious about optimizing costs given the macro environment, and headwinds from slowing consumption growth are likely to continue. seen,” he said.
Alphabet CEO Sundar Pichai said the slowdown was understandable.
“We are leaning toward optimization,” he said. “This is a key moment in helping our customers and we have a long-term view. I am.”
Businesses are optimistic that the cloud will continue to be a strong market for technology, as enterprises still have a long way to go before they can take full advantage of the cloud.
“People often forget that more than 90% of global IT spending is still on-premises,” says Jassy.
Hood also noted that there will soon be financial comparisons from last year when markets began to soften.
“Once you start commemorating it, you find that it gets a little easier year after year in terms of comps,” Hood said.
clock: Continued slowdown in IT spending not reflected in technology revenue
