Amazon.com reported “steady” growth in its AWS business after a sharp slowdown, while Google posted a 28% increase in sales and better-than-expected profit.
Atlassian Corp, a developer of manufacturing software, says there is a “strong” wave of customers moving to cloud services.
The cloud market will continue to expand at a steady pace, but may face challenges as companies increase their use of artificial AI, said John Dinsdale of Synergy Research.
Cloud companies have been under pressure for much of this year, as their enterprise customers looked to cut back on technology spending — costs that have skyrocketed during the Covid-19 pandemic.
Some of the largest customers, especially technology companies, have been forced to lay off employees and cut operating costs, leading to a downsizing of computing.
But the wave of cost-cutting appears to be slowing. Industry executives say enterprise customers are less likely to continue cutting cloud budgets, and some large companies have even begun to increase spending again.
“We see a lot of investment in new workloads, new business models,” said Amazon CFO Brian Olavsky.
Amazon's AWS, the world's largest provider of cloud computing power, reported a 12% increase in second-quarter sales, beating Wall Street expectations.
The pressure is still on.
Contrary to claims that the recession will peak in the fourth quarter of 2022, in their latest earnings reports, tech companies have begun to talk less about economic trends, showing growing optimism.
Still, there are signs that software spending is under pressure. Atlassian added only half the number of new customers that analysts expected.
AWS’s sales growth, while better, was still the slowest since the company began ramping up its cloud business. Meanwhile, growth in Microsoft’s Azure cloud services unit also slowed in the latest three months.
Recent earnings reports have also offered mixed opinions on when generative AI will meaningfully boost sales. Cloud infrastructure companies are expecting server activity to boom as their customers demand more computing power to refine large language models.
Oracle Corp., a latecomer to the cloud, also saw its cloud division grow 76% in June 2023, thanks in part to companies pushing big language models.
Meanwhile, Microsoft CEO Satya Nadella predicts that “real revenue signals” will come in 2024. Amazon’s Andy Jassy said it was “too early” as “most companies are still figuring out how to get there.”
(According to Bloomberg)
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