E-Commerce giant, and also a strong force in services, Amazon has just released its Q3 financial report. The results show a major slowdown in the cloud computing business (AWS). It increased 27.5% year-on-year, but that figures as the smallest growth in the recent story. In fact, the revenue and profit figures have not met Wall Street analysts’ expectations, and some investors are not happy. It’s the lowest rate on Amazon’s cloud computing business since 2014.
The financial report shows that in Q3, Amazon’s Cloud Computing division revenue was $20.5 Billion. The Wall Street Analysts were expecting a $21.1 billion revenue. In comparison, the business revenue rose 33% in the second quarter. As a result, the growth seems to be slowing down.
Amazon Cloud Business revenue declines, it will adopt cost-cutting measures
The cloud computing segment accounts for 16% of Amazon’s total revenue in the third quarter. On the earnings analyst conference call, Amazon CFO Brian Olsavsky says that at the end of the third quarter, Amazon’s cloud computing division’s revenue growth rate was about 25%. The company is in this particular segment since 2006. Back in the last year, the company took a 39% share of the global cloud computing market, down from 41% percent in 2020. So the company has been experiencing a decline.
Gartner says that in 2021, competitors such as Microsoft and Google have increased their cloud computing market share. Over the past decade or so, the cloud computing industry has seen relatively stable growth as companies or government departments around the world gradually transfer computing tasks or storage work to the “cloud”.
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Worth noting, that “inside” the cloud computing division’s revenue growth rate is still higher than the core e-commerce division. So, the decline is not something that investors are appreciating. Amazon may revert the situation, after all, cloud computing is a tendency that is gaining track.
Anyway, Amazon will reduce the costs to keep the business on the green. According to one of the company’s executives, the company will lower spending. He further states that many U.S. companies and institutions, regardless of size, are rethinking their spending in tech. For example, we have Intel. The US manufacturer recently announced it will adopt some cost-cutting measures to adapt to the new times. The same happens for the tech segment in Canada.