Cloud-Computing Giants Keep Growing Despite Slowdown Fears
Cloud-computing companies show that the demand is still booming, according to Bloomberg. Earnings reports from the biggest providers of internet-based computing services, Amazon, Microsoft and Google, showed that these companies are grabbing a larger share of business technology spending, defying warnings from some of their suppliers that a hot corner of the industry might be cooling off.
The cloud giants entered the year facing questions about whether they could sustain their robust growth rates in an environment of uncertain global economic growth and investment. And at the start of fourth-quarter earnings season last month, investors got some worrying news from companies that sell the networking equipment and computer chips that go into the data centers that underpin the cloud. Intel, Micron and Juniper Networks were among those blaming lackluster results on slower spending by data-center customers.
Now, investors have some reason to be relieved. Google reported sales in its "other revenue" segment, a bucket that includes the Google Cloud Platform, of $6.49 billion in the fourth quarter, up 31 percent from a year earlier. Capital expenditures at Google soared 80 percent, to $6.8 billion. While the stock declined in extended trading on concerns about how the investments will impact profitability, much of the higher spending is tied to new data centers and related hardware, a signal that demand for cloud services is holding up.
Amazon reported that its web services division, the leader in providing rented computing infrastructure from its data centers, saw revenue grow 45 percent in the fourth quarter, holding the same pace as the prior period. So did the gains at Microsoft’s Azure cloud group, where sales expanded by 76 percent. Finance chief Amy Hood said the software maker wasn’t seeing any signs of a slowdown in demand for internet-based programs and services. Alibaba posted 84 percent growth in its own cloud unit.
Market researcher Canalys estimated that cloud-infrastructure spending climbed 46 percent in the December quarter to almost $23 billion, bringing investment for 2018 to more than $80 billion. And Synergy Research Group, which closely tracks information technology spending, last month increased its long-term forecasts for cloud-computing demand. Growth by companies’ cloud units has slowed as their businesses matured, but have so far defied expectations for a major pullback.