<span class="HighlightShare-hidden"></span><div id="RegularArticle-RelatedQuotes"><div><div><p>In this article</p></div><ul><li>AMZN<span class="AddToWatchlistButton-watchlistContainer" id="RegularArticle-WatchlistDropdown"><span class="AddToWatchlistButton-addWatchListFromTag"></span></span></li><li>MSFT<span class="AddToWatchlistButton-watchlistContainer" id="RegularArticle-WatchlistDropdown"><span class="AddToWatchlistButton-addWatchListFromTag"></span></span></li><li>GOOGL<span class="AddToWatchlistButton-watchlistContainer" id="RegularArticle-WatchlistDropdown"><span class="AddToWatchlistButton-addWatchListFromTag"></span></span></li></ul></div><div><span class="CreateFreeAccountButton-buttonText"><span>Follow your favorite stocks</span><span class="CreateFreeAccountButton-buttonTextBold">CREATE FREE ACCOUNT</span></span></div></div><div id="ArticleBody-InlineImage-107189074"><div><div><div></div></div><div><div>Amazon CEO Andy Jassy speaks at the Bloomberg Technology Summit in San Francisco on June 8, 2022.</div><div>David Paul Morris | Bloomberg | Getty Images</div></div></div></div><div><p>As growth in traditional tech equipment and software slowed to a trickle in recent years, cloud computing gobbled up spending, reflecting a dramatic change in how companies were choosing to run applications and store data.</p><p>But in the past two weeks, the biggest names in cloud infrastructure issued clear warnings to suggest that the frenetic expansion of the past half-decade is cooling. Historically high inflation and a steady increase in interest rates by the Federal Reserve have led businesses to curtail spending and seek ways to get more out of their existing infrastructure.</p><div></div><div><span class="ExclusiveContentBucket-smallSpan"></span><span class="ExclusiveContentBucket-border"></span><h2>related investing news</h2><div><div id="Regular Article-ExclusiveContentBucket-3-0"><div><img src="https://imageproxy.pbkrs.com/https://image.cnbcfm.com/api/v1/image/107188237-1675362657333-gettyimages-1246745341-AFP_338E7RX.jpeg/query-dj0xNjc1NDI5ODIz?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="Analysts say buy Amazon for the long term, despite recession concerns and slowing AWS growth" original-src="https://imageproxy.pbkrs.com/https://image.cnbcfm.com/api/v1/image/107188237-1675362657333-gettyimages-1246745341-AFP_338E7RX.jpeg/query-dj0xNjc1NDI5ODIz"/><div></div><div></div></div><div><div>Analysts say buy Amazon for the long term, despite recession concerns and slowing AWS growth</div><div><div><div>Samantha Subin</div></div><div>a day ago</div></div></div></div><div id="Regular Article-ExclusiveContentBucket-3-1"><div><img src="https://imageproxy.pbkrs.com/https://image.cnbcfm.com/api/v1/image/107183744-1674657315783-gettyimages-1245722337-AFP_334U4DF.jpeg/query-dj0xNjc1MzkyNTg5?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="Alphabet finally got the message that investors have had it with wild spending" original-src="https://imageproxy.pbkrs.com/https://image.cnbcfm.com/api/v1/image/107183744-1674657315783-gettyimages-1245722337-AFP_334U4DF.jpeg/query-dj0xNjc1MzkyNTg5"/><div></div><div></div></div><div><div>Alphabet finally got the message that investors have had it with wild spending</div><div><div><div>Zev Fima</div></div><div>a day ago</div></div></div></div><div id="Regular Article-ExclusiveContentBucket-3-2"><div><img src="https://imageproxy.pbkrs.com/https://image.cnbcfm.com/api/v1/image/107157737-1669657708386-gettyimages-1445218162-0j5a6215_b7ed52b7-726e-47ec-a874-3c6208be87fc.jpeg/query-dj0xNjc1Mzg2OTEx?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="Why we expect more cost cuts at Amazon after a solid fourth quarter" original-src="https://imageproxy.pbkrs.com/https://image.cnbcfm.com/api/v1/image/107157737-1669657708386-gettyimages-1445218162-0j5a6215_b7ed52b7-726e-47ec-a874-3c6208be87fc.jpeg/query-dj0xNjc1Mzg2OTEx"/><div></div><div></div></div><div><div>Why we expect more cost cuts at Amazon after a solid fourth quarter</div><div><div><div>Jeff Marks</div></div><div>2 days ago</div></div></div></div></div></div><p><span class="QuoteInBody-quoteNameContainer" id="RegularArticle-QuoteInBody-3">Amazon<span class="QuoteInBody-inlineButton"><span class="AddToWatchlistButton-watchlistContainer" id="-WatchlistDropdown"><span class="AddToWatchlistButton-addWatchListFromTag"></span></span></span></span>, <span class="QuoteInBody-quoteNameContainer" id="RegularArticle-QuoteInBody-4">Microsoft<span class="QuoteInBody-inlineButton"><span class="AddToWatchlistButton-watchlistContainer" id="-WatchlistDropdown"><span class="AddToWatchlistButton-addWatchListFromTag"></span></span></span></span> and <span class="QuoteInBody-quoteNameContainer" id="RegularArticle-QuoteInBody-5">Alphabet<span class="QuoteInBody-inlineButton"><span class="AddToWatchlistButton-watchlistContainer" id="-WatchlistDropdown"><span class="AddToWatchlistButton-addWatchListFromTag"></span></span></span></span>, the three leaders in the market for cloud-based storage and servers, all reported deceleration in their respective businesses. On Thursday, Amazon Web Services and Google Cloud, which also includes Workplace productivity software, showed revenue for the fourth quarter that was below analysts' estimates.</p><p>&#34;In Q4, we saw slower growth of consumption as customers optimized GCP cost, reflecting the macro backdrop,&#34; Ruth Porat, Alphabet's chief financial officer, told analysts on the earnings call.</p><p>Google Cloud revenue growth slowed to 32% in the fourth quarter from almost 38% in the third period. Revenue of $7.32 billion trailed analysts estimates of $7.43 billion, according to StreetAccount.</p><p><span class="QuoteInBody-quoteNameContainer" id="RegularArticle-QuoteInBody-7">Amazon<span class="QuoteInBody-inlineButton"><span class="AddToWatchlistButton-watchlistContainer" id="-WatchlistDropdown"><span class="AddToWatchlistButton-addWatchListFromTag"></span></span></span></span>, which pioneered the market over 15 years ago and maintains a commanding lead, said AWS revenue growth decelerated to 20% from 27%. The unit notched sales of $21.4 billion, while analysts were projecting $21.87 billion. As recently as 2018, AWS was growing over 45%.</p><p>Brian Olsavsky, Amazon's finance chief, told analysts that large companies worked with AWS in the fourth quarter to trim their spending because of the difficult economy, a trend that started in the middle of the third quarter. He's not expecting it to reverse anytime soon.</p><div></div><p>&#34;As we look ahead, we expect these optimization efforts will continue to be a headwind to AWS growth in at least the next couple of quarters,&#34; Olsavsky said.</p><p>Amazon CEO Andy Jassy, who started AWS with company founder Jeff Bezos and ran the division until taking the helm at the parent company in 2021, spoke up later on the call to tout the robust pipeline of cloud migrations. However, according to a regulatory filing, customers are showing less confidence in longer-term deals. Amazon reported $110.4 billion in commitments on contracts with original terms longer than one year. That was up 37% from a prior year, a decline from 57% growth in the third quarter.</p><p>Analysts at Bank of America lowered their forecast for AWS, and now expect growth for the year of 11% instead of 15%. That would be down from nearly 29% in 2022.</p><p>&#34;We see LT cloud trajectory as bent and not broken,&#34; wrote the analysts, who have a buy rating on the stock.</p><p>Results from Alphabet and Amazon follow Microsoft's report last week. Microsoft's Azure unit is second in cloud infrastructure to AWS.</p></div><div id="ArticleBody-InlineImage-107177565"><div><div><div></div></div><div><div>Microsoft CEO Satya Nadella speaks at the company's Ignite Spotlight event in Seoul on Nov. 15, 2022.</div><div>SeongJoon Cho | Bloomberg | Getty Images</div></div></div></div><div><p>Microsoft said its Azure and other cloud services revenue growth slowed to 31% from 35%, though the company doesn't disclose the size of the business in dollars.</p><p>On the earnings call, Chief Financial Officer Amy Hood said growth in Azure consumption moderated in December. The company expects even slower Azure growth in the first quarter as organizations look for opportunities to run their existing applications in a more cost-effective manner.</p><p>CEO Satya Nadella acknowledged that trend, but said it's not permanent.</p><p>&#34;At some point, the optimizations will end,&#34; Nadella said on the earnings call. &#34;In fact, the money that they save in any optimization of any workload is what they'll plough into new workloads, and those workloads will start ramping up.&#34;</p><p>Nadella's view is supported by at least some industry experts. Tech research firm Gartner is expecting the category to grow overall by 26.8% in the full year, compared with 25.9% in 2022. The Gartner prediction across all of IT is for revenue growth of 2.4%.</p><p><strong>WATCH:</strong> Truist Securities' Youssef Squali explains why Amazon stock is trading low</p></div><div><div id="Placeholder-ArticleBody-Video-107188979"><div id="InlineVideo-0"><div><div><img src="https://imageproxy.pbkrs.com/https://image.cnbcfm.com/api/v1/image/107188980-16754559441675455942-28043675476-1080pnbcnews.jpg/query-aD00MjImdj0xNjc1NDU2NjQzJnZ0Y3JvcD15Jnc9NzUw?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="Truist Securities' Youssef Squali explains why Amazon stock is trading low" original-src="https://imageproxy.pbkrs.com/https://image.cnbcfm.com/api/v1/image/107188980-16754559441675455942-28043675476-1080pnbcnews.jpg/query-aD00MjImdj0xNjc1NDU2NjQzJnZ0Y3JvcD15Jnc9NzUw"/><span class="InlineVideo-videoButton"></span><span><div><div><span class="PlayButton-flyout">watch now</span><span class="icon-play-triangle PlayButton-icon"></span></div></div></span></div><div><div><span class="InlineVideo-videoLabel">VIDEO</span><span class="InlineVideo-videoDurationWithLeading0">4:08</span><span class="InlineVideo-videoDuration InlineVideo-videoLabel">04:08</span></div><div>Truist Securities' Youssef Squali explains why Amazon stock is trading low</div><div>Closing Bell</div></div></div></div><div></div></div></div><div id="ArticleBody-MobileAdhesion"></div>

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<p>Companies looked for ways to save money on their cloud bills in the fourth quarter, a trend that could persist for at least the first half of 2023.</p>

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Cloud leaders Amazon, Google and Microsoft show the once-booming market is cooling down