Amazon.com Inc.’s (AMZN.O) cloud business is slowing, worrying investors.
Amazon’s cloud business dipped in April after having its worst quarterly growth since 2015.
If losses continue, Amazon, the world’s largest company by market worth, may lose $50 billion from its $1.126 trillion valuation.
Atlantic Equities analyst James Cordwell said Amazon Web Services’ growing exposure to technology businesses and start-ups, which have cut spending in recent months due to rising interest rates and inflation, caused the decline.
“This makes it more difficult to have confidence that Q2 will be the bottom in terms of the decline,” Cordwell said.
On Thursday’s post-earnings conference, Amazon’s finance head, Brian Olsavsky, said that cloud business growth would decline by 5 points this month from 16% in the first quarter as Amazon helps clients cut their payments.
Microsoft Corp.’s (MSFT.O) Azure cloud business climbed 27%.
Microsoft raised its cloud infrastructure market share to 23% in the quarter, while industry leader Amazon maintained its 32% to 34% share.
Still, 17 analysts raised their price targets on Amazon’s cloud prospects, compared to 10 who lowered them. This is because Amazon was not losing consumers to other big businesses, CFRA Research analyst Arun Sundaram said.
“Amazon is the clear market share leader in cloud computing and they will remain that way,” Sundaram stated.
