With quarterly earnings updates just around the corner, many recommendations may come under the scanner as tech companies wade through high interest rates and combat sluggish demand for their products and services.Įlon Musk indicated Tesla Inc. The list also features fellow technology megacaps like Microsoft Corp., Alphabet Inc. has 56 buy or equivalent ratings from analysts, the most among Nasdaq 100 companies, according to data compiled by Bloomberg. “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,” he said.Ī Inc. Analyst Brent Thill said that because AWS generates so much of Amazon’s operating income “a stabilization in cloud is crucial for shares to outperform.”įor Alec Young, chief investment strategist at MAPsignals, Microsoft and Amazon remain attractive despite the slowdown, which he expects to be a temporary pause before growth re-accelerates. Jefferies sees slowing cloud demand as “a key concern” for Amazon. UBS lowered growth estimates for Azure last week, warning that “customer efforts to optimize/trim their cloud spend will be deeper and last longer than most think.” Analyst Karl Keirstead added that recent trends on spending and new developer activity continued in the first quarter and “feel worse than three months ago.” Wall Street has been getting more cautious. Microsoft also warned of a slowdown in cloud software sales last quarter. This echoed what it said in its most recent results. In a shareholder letter released last week, Amazon said AWS “faces short-term headwinds” related to the economic backdrop that will “soften” the growth rate. A year ago, Azure sales expanded 49% and Amazon Web Services 37%. In the first three months of 2023, growth for Microsoft’s Azure unit and Amazon Web Services is expected to fall to 31% and 14%, respectively, when excluding currency fluctuations, according to the average of analyst estimates compiled by Bloomberg. The rest of Amazon’s businesses combined posted a $10.6 billion operating loss.įor both companies, cracks are starting to appear. Microsoft’s Intelligent Cloud unit, which is home to its Azure cloud-services business, accounted for 38% of its revenue and 39% of operating income in 2022.Īmazon Web Services was the fastest-growing of the Seattle-based company’s major businesses last year and generated $22.8 billion in operating income. The Nasdaq 100 Index fell 0.7%.įor years, robust demand for cloud-computing services has acted as a steady growth driver for both Microsoft and Amazon, which in addition to AI excitement have been riding the wave of a broader rally in technology stocks. Microsoft shares fell 0.8% on Thursday while Amazon slipped 0.3%. “I don’t know why you’d want to be over your skis going into first-quarter prints.” “Given how much they’ve run, the setup for earnings is horrible,” Mortonson said. Trouble is, not much of that is priced into stocks that are up solidly this year, according to Ted Mortonson, a technology strategist at Robert W. And when Microsoft and Amazon report results next week, analysts anticipate the slowest revenue growth for their cloud-computing businesses since the firms started breaking out performance last decade. Once-booming demand for cloud-computing services is slowing as businesses rein in spending amid economic uncertainty. Javice Moved Millions From JPMorgan to Signature Months Before Collapse Tesla Drops Model Y Starting Price Below the Average US Vehicleįox Fired Its Biggest Star Tucker Carlson, Who Badmouthed BossesīRICS Draws Membership Bids From 19 Nations Before SummitĬlarence Thomas’s Billionaire Friend Did Have Business Before the Supreme Court this year may also be masking struggles in a business far more critical to the pair’s bottom lines. (Bloomberg) - The buzz around artificial intelligence that’s helped juice gains for Microsoft Corp.
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