Amazon has reported a slowdown in its cloud growth as business customers reduce spending amid ongoing market uncertainty. The retail giant anticipates a 9% increase in profits compared to last year; however, concerns about a decline in cloud services have led to a dip in the company’s stock. After initially rising by $125 billion due to positive consumer sentiment announcements, the stock fell shortly thereafter following remarks from CFO Brian Olsavsky.
Olsavsky indicated that cloud customers are looking to cut back on expenditures in light of current economic conditions, though he also noted that inflation is decreasing globally and consumer confidence is improving.
While CEO Andy Jassy has implemented budget cuts and spending reductions in several divisions, he expressed optimism about opportunities for growth in Amazon’s AI tools and cloud services. Although sales growth for Amazon Web Services (AWS) has slowed in the first quarter, the company is in a competitive race with Google and Microsoft to enhance its AI offerings.
James Campanini, CEO of tech consultancy firm VeUP, commented on the challenges facing the cloud market: “Despite economic uncertainty, the cloud market remains fundamentally strong, serving as the backbone for business operations and growth. With organisations looking to reduce overheads in anticipation of further challenges ahead, the elephant in the room is cost optimisation.”
Campanini further elaborated, stating, “The reality is that many companies lack the resources and expertise to optimise their spending in this area. Many also see cost optimisation as an afterthought and fail to incorporate it into the design phase. Addressing this issue necessitates collaboration with dedicated cloud partners who can help businesses realign, access a broader range of services, and operate more efficiently to maximise their cloud investments.”