Amazon's Market Cap Drops by $42 Billion
The slowdown in cloud business growth could lead to a $42 billion decrease in Amazon's market capitalization, currently at $1.126 trillion. The company's stock was among the most traded on U.S. exchanges, with nearly 80 million shares changing hands.
AWS Decline Linked to Tech Companies and Start-ups
Analyst James Cordwell of Atlantic Equities suggests that the downturn in Amazon Web Services (AWS) growth is due to its greater exposure to technology companies and start-ups. These businesses have cut spending recently due to rising interest rates and high inflation, making it difficult to predict when the decline might decrease.
Amazon CFO Forecasts 5% Decrease in Cloud Growth
During a post-earnings call, Amazon's CFO Brian Olsavsky revealed that the company's cloud business growth would fall by five percentage points in April compared to the 16% recorded in Q1. This decline is partially due to Amazon helping clients reduce their bills.
Microsoft's Azure Cloud Business Outperforms Amazon's
In contrast, Microsoft Corp's Azure cloud business grew 27%. Synergy Research Group reported that Microsoft increased its share of the cloud infrastructure market by one percentage point to 23%, while Amazon maintained its 32-34% market share.
Analysts Remain Optimistic About Amazon's Cloud Future
Despite the recent slowdown, analysts are largely positive about Amazon's cloud business prospects. Approximately 17 analysts raised their price targets on the stock, while 10 lowered their views. CFRA Research analyst Arun Sundaram attributes the slowdown to Amazon assisting clients in moving to lower-price tiers. He believes Amazon will continue to lead the market in cloud computing.