Azure and Google Cloud EPS This Week
Growth for Microsoft Azure and Google Cloud Platform will continue to slow this week when MSFT reports earnings on October 24th and Alphabet reports on the same date. Azure and GCP customers are largely cutting heads or keeping headcount flat, not adding headcount. Thus, Azure and GCP usage will be flattish to down for most customer organizations. Venture firms have tightened purse strings, therefore there is not a new cohort of startup firms that are building on top of Azure and GCP or Oracle and AWS for that matter.
My sense is that to the extent AWS, Azure, GCP and Oracle (Oracle’s remote server biz), are generating revenue lift, it is largely from price increases. We will likely see a step down in revenue growth for AWS, Azure, GCP and Oracle Cloud as we move through the December quarter. 2024 will likely bring a softer demand environment for cloud services as interest rates remain elevated.
The number of mega contracts ought to be down as should the number of small contracts from small companies.
Deals should be taking longer to close.
I certainly do not see Generative AI as a significant driver of revenue regardless of the forthcoming rhetoric from Satya Nadella (MSFT CEO) and Sundar Pichai (GOOGL CEO).