Alphabet, Google’s parent company, witnessed its cloud business experiencing the slowest growth in at least 11 quarters. This led to a 5.7% decline in the company’s stock value during after-hours trading. Despite Google surpassing profit and sales estimates on Wall Street, this drop reflects the strong investor desire for the company to demonstrate advancements in artificial intelligence and maintain competitiveness in the cloud industry, particularly against Microsoft’s Azure and Amazon’s AWS.
Growing concerns about a global economic slowdown have prompted many companies to reduce their spending on cloud-related services, including costly artificial intelligence tools. This spending restraint has consequently slowed down the revenue growth of Google’s cloud unit, which increased by 22.5% in the third quarter. This marks a decline from the 28% growth recorded in the previous three-month period.
In specific figures, Google Cloud’s revenue in the third quarter rose to $8.41 billion. This marks the slowest growth rate since at least the first quarter of 2021. The cloud unit reported an operating income of $266 million, marking a significant improvement from an operating loss of $440 million in the same period last year. Wall Street’s projection for cloud computing revenue was $8.62 billion.
