Tomorrow Investor

Cloud Computing Sector Growth Slows for Tech Titans


It appears that the golden goose that proved a boon for global technology throughout the pandemic is now laying its golden eggs at a much slower pace. 

While cloud computing proved to be a boon for companies like Amazon, Google, and Microsoft over the past couple of years, the year-end financial reports for all three companies reined in their enthusiasm for further expansion as the sector’s growth appears to have slowed down.

So Much for Domination

Between them, Amazon Web Services (AWS) and Microsoft Azure have dominated the cloud computing sector since 2020. However, both companies showed their lowest level of growth in the fourth quarter of last year and experts opine that growth will be even slower in the coming months.

When the pandemic first hit in early 2020 and drove most schools and businesses to make the shift to remote work, Microsoft Azure posted growth of around 50% per quarter. AWS, on the other hand, experienced a 30% increase in sales throughout the same period. Unfortunately, with workplaces and schools reopening for in-person activities, this has drastically changed.

Microsoft’s current-quarter revenue forecast for its intelligent cloud business – a segment that includes Azure and other technologies – was well below analysts’ forecasts. Likewise, AWS noted that growth slowed to 20% – its lowest ever – as 2022 drew to a close.

What’s Up with the Cloud Computing Scene?

Experts are quick to say that, despite the slowdown, cloud computing is still big business and continues to grow – just not as fast as most companies want it to be.

The growth rate for AWS, Azure, and Google’s parent company Alphabet all fell by at least ten points from where they were nine months ago – and those in the know blame economic instability for the slowdown. 

Rikin Shah, founder, and chief executive officer for cloud migration firm, says that many current cloud customers are keeping a closer eye on their money and are thinking twice before paying for cloud-based solutions. Indeed, the pay-per-usage system for cloud infrastructure is causing many companies to cut costs by simply using less.

Likewise, external factors also have their role to play in the slowdown. According to Inc.’s chief financial officer Brian Olsavsky, recent developments in the fields of cryptocurrency trading and mortgage lending are among the issues weighing down the cloud computing sector and impeding growth.

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