AWS warns that customer demand for cloud services is decreasing as Amazon’s results lag

Amazon Web Services (AWS) announced a 27.5% increase in sales during the third quarter, the company’s slowest annual revenue growth rate since it began publishing its financials separately in 2014.

Revenue for the cloud computing behemoth was 20.5 billion, while operating income was 5.4 billion, up from 4.9 billion in the same period a year earlier.

Despite slowing growth, AWS nevertheless outpaced the expansion of the internet behemoth as a whole, which reported sales of 127.1 billion in Q3 2022, an increase of 15% year over year.

What’s causing the delay?

The decrease, according to Amazon CFO Brian Olsavsky’s call with investors as published by The Register, is due to “ongoing macroeconomic uncertainty” that have “seen an upswing in AWS customers focusing on reducing cost.”

Olsavsky said on the investor call that AWS’s energy prices are “materially higher… up more than 2x over the last couple of years,” highlighting this as a problem the company is facing.

AWS still has a huge share of the cloud computing market, notwithstanding its poor performance.

According to Statistica, as of the first quarter of2022, Amazon Web Services (AWS) has a 33.0% share of the global cloud services market (opens in new tab).

When will we see AWS’s next big move?

Despite the company’s already enormous revenues, there are many opportunities for expansion.

Recently, instead of relying on Nvidia or AMD processors, AWS has began delivering EC2 instances based on its own line of self-manufactured Gravition chips, which leverage licensed-ARM technology.

To prepare for what might be a significant expansion in the UK market, AWS has been aggressively hiring for technical positions in Edinburgh and Cambridge, as well as corporate and warehousing positions in London and Manchester, in 2022.