Technology Sector Check - Cloud Revenue Growth Continues To Decelerate: ICICI Securities
Software/SaaS players are also witnessing shifting client focus towards cost optimisation.
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ICICI Securities Report
A detailed analysis of the performance of hyperscalers and software/SaaS companies indicates that demand environment has incrementally slowed down and number of software vendors and hyperscalers highlighting the macro impact has increased.
Cloud capex spends, a lead indicator of future cloud migration demand, moderated in Q3 CY22 and were below consensus estimates for Microsoft and Google.
Microsoft’s cash capex of $6.3 billion was 5% lower than consensus expectations at $6.6 billion. Similarly, Google’s Q3 CY22 capex of $7.3 billion was 5% below consensus expectations.
In contrast to the above, Amazon reported Q3 CY22 cash capex of $16.4 billion (up 4% YoY and up 4% QoQ), 8% above consensus estimates.
AMD’s management alluded to enterprise clients being conservative on capex spends and near-term optimisation of spends at individual cloud vendors.
We had also highlighted in our earlier note that semiconductor chip suppliers had indicated cautious purchasing behaviour of cloud service providers.
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