Amazon’s cloud computing division, reported 20% growth in Q4, compared with 27.5% and 33% growth in Q3 and Q2 respectively. Credit: 1 Revenue growth at Amazon’s cloud computing division, Amazon Web Services, continued to slow in the fourth quarter as enterprises advanced their cost-cutting measures, brought on by uncertain macroeconomic environment. Despite a 20% year-on-year increase in revenue, reaching $21.4 billion in Q4 2022, this growth rate is slower compared to the 27.5% and 33% growth seen in third quarter and second quarter, respectively. “Starting back in the middle of the third quarter of 2022, we saw our year-over-year growth rates slow as enterprises of all sizes evaluated ways to optimize their cloud spending in response to the tough macroeconomic conditions,” Brian Olsavsky, chief financial officer at Amazon, said during an earnings call with analysts. “As expected, these optimization efforts continued into the fourth quarter,” Olsavsky added. Enterprises’ cost optimization to persist for next two quarters AWS expects the slowdown in customer spending to persist for at least the first half of fiscal year 2023, spanning the next two quarters. “As we look ahead, we expect these optimization efforts (reduced spending) will continue to be a headwind to AWS growth in at least the next couple of quarters,” Olsavsky said. In January, AWS revenue growth was in the mid-teens, the CFO added. The slowdown in spending, according to Olsavsky, is impacting all industries with financial services, cryptocurrency and advertising being particularly sluggish. “As there’s lower advertising spend, there’s less analytics and compute on advertising spend as well,” Olsavsky said, according to a Motley Fool transcript. Amazon CEO Andy Jassy added that enterprises are seeking to lower their short-term AWS bills by performing certain tasks less frequently. Both, Jassy and Olsavsky stated that AWS was working with customers to lower costs in the short term through solutions such as switching to lower-cost products or offering different types of storage for different data types. Cloud computing industry faces the heat Microsoft and Google, which compete with AWS for cloud computing market share, have reported similar reduction in customer spending, impacting growth in their respective cloud businesses. Microsoft, which reported fourth-quarter earnings last month, saw its Azure and other cloud services revenue growth slow to 31% from 35% in the previous sequential quarter. Note that Microsoft does not separately report Azure revenue. Google’s cloud revenue growth also slowed to 32% for the fourth quarter, down from 38% in the previous sequential quarter. In the fourth quarter, Google Cloud reported revenue of $7.3 billion and an operating loss of $480 million. Related content news Camunda simplifies process automation with new AI-powered natural language features Vendors are adding AI features to process orchestration and automation platforms — but is the technology a revolution or an evolution? By John Dunn May 16, 2024 5 mins Generative AI Business Process Management Process Improvement feature What’s holding CTOs back? Internal politics, organizational culture, and funding issues top the list of issues derailing CTOs’ change agenda — so too does demonstrating the value of innovation. By Esther Shein May 16, 2024 8 mins CTO IT Leadership feature Baldor’s first-ever CIO sets the transformation agenda Ex-UPS IT leader Satyan Parameswaran aims to help the 33-year-old specialty foods distributor expand its business opportunities as it first CDIO, starting with the ‘art’ of analytics and AI. By Paula Rooney May 16, 2024 6 mins Transportation and Logistics Industry Digital Transformation IT Leadership feature Italian CIOs at the crossroads of transformation and sustainability CIOs are taking on added responsibilities as new regulations take root across the country. Equipping more data-driven enterprises with better technology to achieve ESG goals is one example. By Patrizia Licata May 16, 2024 8 mins CIO Government Healthcare Industry PODCASTS VIDEOS RESOURCES EVENTS SUBSCRIBE TO OUR NEWSLETTER From our editors straight to your inbox Get started by entering your email address below. Please enter a valid email address Subscribe