The cloud computing market may finally be set to cool off

An abstract image of a magnifying glass over a digital cloud.
(Image credit: Shutterstock/Illus_man)

Wider economic pessimism may finally be impacting the cloud computing market after revenue growth at all the major cloud providers slowed down in Q2 2022.

Amazon Web Services (AWS) posted sales of $19.7 billion for its second quarter, up 33% year-over-year, but with a 37% growth rate that was lower than the previous quarter.

Google Cloud brought in $6.3 billion of revenue in Q2 2022, a 35% year-on-year increase compared to Q2 2021’s $4.6 billion revenue, but much lower than the 44% jump from Q1 2021’s $4 billion to Q1 2022’s $5.8 billion.

Why the slowdown?

The Register pointed the finger at a mixture of supply chain concerns, increased spending on infrastructure, and increased electricity bills. 

Small data centers in the UK and Ireland have seen their margins significantly impacted as a result of the energy crisis, with some facilities seeing energy bills increase by as much as 50% over the last three years according to research by Aggreko.

Inability to keep up with demand  also could be a factor 

The Information reported that two dozen Azure data centers internationally are operating with limited capacity, citing two Microsoft managers with knowledge of the issue.

What are cloud firms doing?

It seems cloud firms are doing everything they can to keep costs low and profits high.

In 2022, AWS, Google, and Microsoft all added another year to the lifecycle of their cloud infrastructures, which could lead to significant savings across the board.

In Microsoft’s case alone the move could save $3.7 billion in its 2023 financial year alone, according to its own estimates.

But despite the possibility of slower growth on the horizon, the market as a whole for cloud hosting and cloud storage looks immensely healthy.

A recent Gartner report found the cloud market grew by 41.4% in 2021 to total $90.9 billion.

Will McCurdy has been writing about technology for over five years. He has a wide range of specialities including cybersecurity, fintech, cryptocurrencies, blockchain, cloud computing, payments, artificial intelligence, retail technology, and venture capital investment. He has previously written for AltFi, FStech, Retail Systems, and National Technology News and is an experienced podcast and webinar host, as well as an avid long-form feature writer.