Amazon has recently reported a decline in its cloud business due to customers cutting spending, according to Reuters. On the bright side, the company’s quarterly sales and profit have topped expectations. In late April, Amazon’s stock added about $125 billion in value amid stronger consumer confidence. Notably, the growth rate was five percentage points lower in April than in the first quarter of this year. Still, the IT giant holds a solid position among its cloud competitors. A drop in the share price came shortly after Amazon’s Chief Financial Officer Brian Olsavsky said that many cloud customers had closed their accounts as of the second quarter of 2023. A sudden rise and fall in the company’s stock is viewed as a worrisome sign. To address the challenge, Amazon’s CEO Andy Jassy is going to cut spending across many company divisions. At the same time, Amazon is facing tough competition from its rivals, Microsoft and Google, which are launching advanced AI-based tools. To reduce costs, the online retailer plans to lay off 27,000 employees starting this September. As of today, the company’s staff is already down by 10% to 1.47 million full-time and part-time workers. Earlier, Amazon had to end some of its services and reorganize delivery to make it faster and cheaper. These measures contributed to a quarterly profit of $3.17 billion compared to a loss of $3.84 billion in 2022. Yet, investors are cautious about buying Amazon’s stock. Analysts at Huntington National Bank warn that a slowdown in the company’s cloud business is quite noticeable while nothing like this can be observed at either Microsoft or Google. Currently, Amazon is looking for new revenue sources with a focus on generative AI, which can create text, imagery, and other content. This represents a huge opportunity for Amazon’s cloud division.
