AWS growth. AWS grew only 12% year over year, to $22bln in net sales for the quarter. That marks a deceleration from the prior quarter, when sales expanded 16%, and the slowest growth since 2015, when Amazon began breaking out cloud revenue. According to CEO Andy Jassy, “AWS growth stabilized as customers started shifting from cost optimization to new workload deployment, and AWS has continued to add to its meaningful leadership position in the cloud.” AMZN believes customers are shifting from cost optimization to spinning up new workloads in the cloud, but the slowest growth since inception is clearly a very negative datapoint for the overall cloud market. AWS appears to have not yet found the floor.
Conclusion. Cloud growth is coming from the ongoing trend in cloud migrations, which is a shift from traditional to cloud-based infrastructure. Additionally, the development and utilization of AI-based solutions are encouraging new, born-in-the-cloud AI-first workloads.