The cloud industry is seeing some of its first warning signs that the honeymoon may be over, with the top platforms on the verge of a major slowdown.
Cloud computing firms have experienced record growth during the course of the pandemic, but analysts are warning that earnings may disappoint on slowing cloud growth.
According to Yahoo Finance, analysts believe this week’s earnings reports may reflect the slowest revenue growth since companies started reporting their cloud businesses separately.
“Given how much they’ve run, the setup for earnings is horrible,” said Ted Mortonson, a technology strategist at Robert W. Baird & Co. “I don’t know why you’d want to be over your skis going into first-quarter prints.”
The anticipated slow growth is just another indication of the state of the economy. While cloud computing was heralded as a way for companies to scale on demand while keeping expenses low, runaway costs have become a growing concern for many businesses. AWS has tried to reassure customers, but high-profile companies have begun scaling back their investment in commercial cloud options.
Despite the headwinds that seem to be forming, not everyone is ready to call it a day on cloud companies.
“There’s still a lot of runway ahead for cloud computing, so I don’t think investors should obsess too much over the level of growth over a couple quarters,” said Alec Young, chief investment strategist at MAPsignals.
