AWS growth. AWS grew only 12% year over year, to $23bln in net sales for the quarter. According to CEO Andy Jassy, AWS continues to “stabilize” but “customer cost optimization still remain a headwind….we have seen the rate of new cost optimization slow down in AWS, and we are encouraged by the strength of our customer pipeline.” AI is not having the offsetting impact to customer cost reduction that Microsoft is experiencing.
Overall. The combined Q3 revenue of all three providers is really the number to look at if we want to see the overall health of the cloud market and in our view, software spend. The three cloud providers combined did $56bln in cloud revenue in Q3, growing 17%. That growth does represent an uptick from Q2, so perhaps the trend of customers reducing their cloud spend is reversing, especially given the benefits of AI. That’s the most positive sign for overall software sales we have seen since at least Q1 2022, as growth has finally ticked up quarter to quarter (you can see we finally have some yellow and green trends in the table).
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