The big three cloud players all announced earnings this past week and as expected, cloud growth is slowing. But don’t kid yourselves, hyperscale clouds remain the epicenter of innovation in tech and foundation models like GPT will only serve to harden this fundamental fact. Our data suggests the deceleration in cloud spend is a function of two related factors:
1) The macro spending environment has negatively impacted consumption; and
2) Aggressive cloud optimization, which is being promoted by the big three cloud vendors in an attempt to lock in customers to longer term commitments. There is still no clear evidence in the numbers that repatriation is a factor. Rather, the ability to quickly dial down spending and pause projects is an attractive feature of cloud computing and one that, until now, has never really been tested.
In this Breaking Analysis we try to explain the implications of this seemingly simple but nuanced dynamic. We’ll review the latest hyperscale cloud data for the big three players, share our analysis of certain comments made by cloud players and show you the latest ETR data on spending and market presence.