Microsoft's-Cloud

Alphabet's Cloud Business Faces Slowest Growth in 10 Quarters

Google’s parent company, Alphabet’s cloud business has reported its slowest growth in ten quarters. This downturn has led the company’s stock to drop by 5.7% in after hours trading. The decline took place even after Google surpassed Wall Street’s expectation for both profit and sale. Needless to say, this implies the competition going in the cloud business. The investors want the companies to excel in artificial intelligence.

This downturn in the revenue growth has attracted people’s attention to the plight of the global economy. The companies are taking action and reducing their spending on cloud-related services, including expensive AI tools.

Google's cloud unit's revenue increased by 22.5% in the third quarter which is a drop from the previous quarter's 28%. Google Cloud generated $8.41 billion in revenue during this period. It is apparently its slowest growth since at least Q1 2021. The cloud unit made a profit of $266 million during this period. Experts considering it a big improvement as last year during the same period they lost $440 million. Irrespective of the results, Wall Street has anticipated a cloud computing revenue of $8.62 billion. As the company’s finance chief, Ruth Porat has said, the company’s growth rate may be slow now but they have set a target of long-term improvements in customer satisfaction and profitability.

In comparison to Alphabet's cloud computing unit, Microsoft's Intelligent Cloud unit has demonstrated robust growth. It exceeded the expectation of experts by generating a revenue of $24.3 billion. Azure's revenue grew by 29%, surpassing the 26.2% growth estimate from market research firm Visible Alpha. As a result, Microsoft's shares surged by 5% in after-hours trading. Investors are unsatisfied with Google cloud’s performance. There is a high chance that they may fall behind Microsoft’s Azure and Amazon’s AWS.

Keeping evolving economic conditions in mind, Alphabet has previously laid off 12,000 employees. The company also reduced its global recruiting team in September. Alphabet spent $2.1 billion on severance and related charges in the first nine months of the year.