Microsoft (MSFT), Amazon (AMZN), and Alphabet’s (GOOG, GOOGL) respective cloud infrastructure spending appears to be stable and there is a chance of slight outperformance compared to forecasts, UBS said in a note Thursday.
However, there is no clear sign of significant cyclical improvement in cloud spending, so rapid growth in the near term seems unlikely, analysts, including Karl Keirstead, said.
The analysts said discussions with customers and partners indicated that major AWS and Azure partners expect growth to rebound. However, customers remain focused on controlling costs due to a challenging economic outlook.
The feedback on cloud spend optimizations was a bit disappointing, they said, adding that Microsoft Azure seems to be gaining share, while the feedback on Google Cloud was more muted than usual.
“In our view, Street expectations for AWS, Microsoft Azure, and Google Cloud growth appear to be in a good place, with a strong potential for modest upside largely given easier compares and stable core demand,” the analysts said.