Cloud Sales Growth Stalls for Amazon, Microsoft, and Google Amid Uncertain Economy
Despite the potential of generative artificial intelligence (AI) to boost cloud computing sales, Amazon, Microsoft, and Google are experiencing stalled growth rates in the sector. All three major cloud providers reported this week that customers are closely monitoring their IT budgets due to an uncertain global economy. Rising inflation and geopolitical conflicts have contributed to the slowdown in cloud sales growth.
Google disappointed investors by reporting a 22% revenue growth in its cloud unit for the quarter, down from 28% in the previous quarter. The company attributed the stalled growth to “customer optimization efforts,” which is a euphemism for cost-cutting measures.
Amazon’s cloud unit also experienced a slowdown, with a year-over-year revenue growth of 12% for this quarter and the previous one. In comparison, sales for Amazon Web Services were growing at more than double that rate last year. Amazon’s CFO, Brian Olsavsky, acknowledged that “customer cost optimizations still remain a headwind.”
Microsoft, on the other hand, reported a 24% increase in cloud revenue for the quarter, driven by better-than-expected sales of AI services. The company has invested billions in OpenAI, the company behind ChatGPT, giving it an advantage over Amazon and Google in selling AI services. Microsoft CEO Satya Nadella highlighted the 40% growth of GitHub Copilot and reassured investors that slowed growth shouldn’t be a cause for concern.
While Google executives evaded questions about cloud spending, Microsoft’s CFO, Amy Hood, emphasized that a budget-conscious customer base is not alarming. She stated that customers optimizing their workloads is a normal part of running operations.
The uncertain economy and customer budget constraints continue to impact cloud sales for these major providers. However, industry leaders like Microsoft remain optimistic about future growth as new workloads emerge and optimization cycles are completed.
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Source: [Business Insider](https://www.businessinsider.com/cloud-sales-growth-stalls-amazon-microsoft-google-2023-10)