Q2 Cloud spend and what it means for software

We closely monitor Amazon, Microsoft, and Google’s cloud revenues to get a feel for where the market for software is going.? Those companies cloud segments are Amazon’s AWS, Microsoft’s Intelligent Cloud, and Google Cloud Products.? All three companies have reported Q2 financials.? The data is below.

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Interestingly, MSFT saw a quarter to quarter decline in it’s Intelligent cloud revenue, up 19% YOY in the latest quarter versus 21% YOY last quarter.? Google however accelerated in the current quarter to 29% YOY versus 28% last quarter.? Amazon’s growth also accelerated to 19% YOY versus 17% last quarter.? It’s notable that Google’s cloud is about 1/3rd the size of the Amazon and MSFT, but the growth isn’t 3x or even 2x greater.

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The combined revenue of all three providers is really the number to look at if we want to see the overall health of the cloud market and in our view, software and AI spend.? The three cloud providers combined did $65bln in cloud revenue in Q4, growing 20% YOY.? The growth is flat quarter to quarter, due to the drag from Microsoft, but 20% is a solid number, especially given the size of these numbers.? We need to see a few more quarters play out to determine if the slowdown in growth is a trend, or if this is just a pause from the last three quarters of accelerating growth.? ??

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