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Big Tech earnings face more heat as cloud cover fades

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Big Tech results reinforced concerns a boom in cloud services is easing, limiting a lucrative source of profit when a slowing economy has hit the companies' other businesses and prompting a bet on artificial intelligence as the next growth driver.

Cloud services had long been a reliable source of earnings for Microsoft and Amazon.

Microsoft's revenue in its so-called intelligent cloud business that includes Azure rose 18% to beat expectations for October to December. But its current-quarter forecast of $21.7 billion to $22 billion was below estimates of $22.14 billion. Amazon finance chief Brian Olsavsky said on Thursday that the company expects slower cloud growth rates for the next few quarters. That echoed Microsoft, which said last week that growth in its Azure cloud-computing business would slow by 4-5 basis points in the March quarter.

As an investor and partner of OpenAI, Microsoft looks well poised, analysts said, but any gains may take time to translate into profits.

 

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The cloud does not exist, you are just renting a little bit of someone else’s computer. It won’t be any more reliable than a well run server farm but when the cloud goes down you can blame someone else.

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