Amazon jolts investors with talk of cloud growth slowdown

Amazon jolts investors with talk of cloud growth slowdown

Amazon.com Inc. warned that growth in its cloud computing division is continuing to cool, dashing hopes that the company’s most profitable division was weathering a lackluster environment for technology spending.

Amazon Web Services revenue rose 16 percent to $21.4 billion in the first quarter as the Amazon reported stronger-than-expected profit and sales in the period. While the cloud unit’s growth rate was higher than Wall Street projections, it was a record low since Amazon began breaking out AWS sales.

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On a conference call Thursday after the results were released, executives jolted investors with the disclosure that sales growth in the unit had slowed further in April.

The shares, which had jumped as much as 12 percent in extended trading, gave up those gains after the comments and fell 2 percent. Some analysts have speculated that as companies seek to trim technology costs, AWS growth could sink to single digits, a dramatic slowdown for a business that entered 2022 with quarterly sales gaining almost 40 percent year over year.

AWS is the largest seller of rented computing power and software services, a market it contests with rivals including Microsoft Corp. and Alphabet