Amazon’s cloud computing subsidiary Amazon Web Services is facing challenges as competition from other cloud providers such as Microsoft ramps up amid the broader economic downturn, the company's CEO Andy Jassy has warned investors.
“Despite growing 29% year-over-year in 2022 on a $62 billion revenue base, AWS faces short-term headwinds right now as companies are being more cautious in spending given the challenging, current macroeconomic conditions,” Jassy wrote in his second annual shareholder letter.
But he said he remains optimistic about the business segment, noting: “While these short-term headwinds soften our growth rate, we like a lot of the fundamentals that we’re seeing in AWS. Our new customer pipeline is robust, as are our active migrations.”
Amazon’s AWS business is closely watched by investors as it contributes significantly to the eCommerce giant’s operating income, accounting for $22.8 billion in operating income for the 2022 fiscal year.
Shares of Amazon had edged higher in pre-market trading on Thursday, up 0.7% at US$98.54.
Contact the author at emily.jarvie@proactiveinvestors.com
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