Tomasz Tunguz Blog · 2023-02-03
· 1217d
Cloud Market Slowdown: 2023 Growth Projections Amid Cost Optimization Pressures
Tomasz Tunguz analyzes earnings reports from AWS, GCP, and Azure to predict cloud growth will decelerate to 18-22% in 2023, down from 44% a year prior. Major cloud providers are prioritizing profitability over growth as customers optimize costs, though long-term cloud adoption potential remains substantial with 90-95% of global IT spend still on-premises.
Metrics in this report
AWS Annualized Revenue Run Rate
85$b
minimum
Based on Q4 performance
AWS Operating Margin
30%
rate
Profit margin comparison
AWS YoY Revenue Growth (Jan 2023)
mid-teens%
range
First month of 2023
Cloud Platform YoY Growth Rate (Current)
27%
average
AWS, GCP, Azure at time of analysis
Cloud Platform YoY Growth Rate (Historical)
44%
average
AWS, GCP, Azure one year prior
GCP Operating Loss
480$m
absolute
GCP profitability metric
GCP Operating Margin
-7%
rate
On $7.3B revenue
Global IT Spend On-Premises
90-95%
range
Total global IT infrastructure spend
Incremental Annual Cloud Spend (20% growth on $85B base)
17$b
calculated
New annual spend at projected growth rate
Projected Cloud Growth Rate (2023)
18-22%
range
Industry forecast