Tomorrow Investor

Cloud Computing Sales Lag in March Q3 for Big Tech 

Cloud-Services-Stocks-down

March is turning up to be a bad month for tech giants, as cloud computing sales have slowed down for Google, Microsoft, and Amazon.com. Stocks for these three tech companies are expected to dip, and the biggest loser is expected to be Amazon Web Services.

The slowdown is not entirely unexpected, since revenue growth in the cloud computing space has been sluggish in 2022. While it can be blamed on the law of big numbers, analysts expected moderate growth to come, but AWS sales only peaked at 29% growth or $80.1 billion that year.

Aside from that, cloud customers have also been wary of the efficiency of cloud computing services while the specter of recession hounds the economy. 

For AMAZN, a Jefferies report pegged the AWS’ revenue growth to slow down to 15% compared to 37% last year. At the same time, UBS places the estimate at 13% in Q3 of March.

Stock analyst Karl Keistead of UBS explained that there has been a steady trend of customers cutting back on their cloud spending, something that is “beyond any historical norm.” However, the positive news is that the cloud growth slowdown can moderate substantially during the second quarter of 2023. 

Meanwhile, GOOGL and MSFT stocks are not doing any better, as corporate customers are dialing down on their cloud spend. Google Cloud revenue growth has dipped to 25% from last year’s 44%. Microsoft’s Azure cloud computing unit is estimated to see its revenue growth fall to 30% from 49% last year. 

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