Shulou(Shulou.com)11/24 Report--

February 6 news, according to foreign media reports, this winter the major technology giants are a little "cold." Under the wave of layoffs, Silicon Valley technology giants have handed over unsatisfactory financial results one after another.

According to the latest financial report, the earnings of the five tech giants are all under great pressure. Revenue growth of Amazon, apple, Alphabet, Microsoft and Meta did not exceed 10% in the fourth quarter of 2022, while net profit declined. And the decline of the giant "housekeeping business" is undoubtedly one of the biggest "fires".

Among them, the cloud computing business is an important engine for the performance growth of the three cloud giants Amazon, Microsoft and Google, but the slowdown in the growth rate of the cloud business is also the pressure they have to face. the current results have heightened concerns that the cloud services boom is slowing, prompting them to bet that artificial intelligence will be the next growth driver.

Cloud services have long been a reliable source of revenue for Microsoft and Amazon. Microsoft's Azure cloud computing business grew by about 50 per cent a quarter in 2020, while Amazon AWS sales grew by about 30 per cent over the same period.

But things have changed.

At present, from the overall situation, Amazon and Microsoft cloud computing business growth is at the lowest level, and there is a trend of further slowdown. Amazon's AWS cloud services business, which used to contribute huge profits to the company, has slowed sharply this time, with revenue from AWS's cloud business reaching $21.378 billion in the fourth quarter, slightly below analysts' expectations of $22.03 billion, up 20% from $17.78 billion in the same period last year, a record low, compared with 27.5% in the third quarter of last year.

"the decline in AWS has been worse than expected, which means Amazon will not be as reliant on the business unit's operating profit as it used to be in the coming quarters," said Insider Intelligence's chief analyst.

Microsoft's Azure cloud computing service revenue grew by about 31%, but the growth engine fell 4% from a year earlier, slowing for four consecutive quarters.

In addition, Google's cloud business, the smallest of the three, grew in the fourth quarter, with revenue up 32 per cent year-on-year to $7.315 billion, but it was also the slowest increase since the company began publishing the indicator in 2019. And Google's cloud revenue growth is slowing quarter by quarter, rising 43.8%, 35.6% and 37.6% respectively in the first three quarters of 2022.

Analysts point out that the cooling of the cloud business also reflects that corporate customers are starting to regain control over optimal business spending in the context of the macroeconomic downturn.

However, there is another village around the corner, and soon the cloud business seems to have embarked on a new path. At present, with the popularity of ChatGPT based on cloud services, the potential boom in artificial intelligence may once again boost the demand for cloud services.

It is understood that artificial intelligence applications require a lot of computing power, and the more users, the higher the server cost. For example, ChatGPT hosted on Microsoft's cloud service Azure burns at least $100000 a day. In order to get more money and numeracy training models and save costs, artificial intelligence startups often choose to work with large companies.

As a result, the cloud giants have stepped up their efforts to enter the field of AI. Microsoft's cloud service Azure has become the exclusive supplier of OpenAI, and it is also reported that Microsoft is preparing to invest an additional $10 billion in OpenAI.

Google is not to be left behind. It has recently been reported to have invested $300m in Anthropic, a generative artificial intelligence start-up, to acquire a 10 per cent stake in the company, and soon announced a cloud partnership.

However, analysts also say that any benefit takes time to turn into profit, and that demand for AI and related cloud services also takes time to see results, and is unlikely to offset current headwinds in the enterprise market in the coming quarters.

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