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Cloudy with a Chance of Budget Cuts

Cloudy with a Chance of Budget Cuts

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  • Executives from the top cloud vendors stated that clients are seeking ways to reduce costs as they move more workloads from their data centers to the cloud. Despite the continued growth of the cloud-computing market, this has resulted in a slowdown in revenue growth for Amazon, Microsoft, and Google's cloud divisions. Amazon Web Services, the market leader, has experienced a narrower operating margin and lower profits for its parent company as a result.

  • In 2022, fears of a recession caused a slowdown in AWS's third and fourth quarters, followed by Microsoft's CFO's warning of a December deceleration. Recently, Amazon's CFO announced that AWS revenue growth in April had dropped about 5% from Q1, causing a decline in the company's stock price. Similarly, Google's cloud growth slowed from 32% in the prior quarter to 28% in Q1, despite the division's first-time profitability.

Why it matters

Tech companies are optimistic that the cloud market will remain robust since businesses have yet to fully utilize its advantages. Sundar Pichai, the CEO of Alphabet, acknowledged the current slowdown but explained that they are focusing on optimizing their services to assist customers in achieving their goals in the long term. The company is committed to helping customers improve their efficiency where possible.


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