Amazon mentioned income in its cloud unit elevated by 20% within the fourth quarter, a slower tempo than analysts had projected and extra sluggish than the 27.5% progress price within the third quarter.

Cloud progress seems to be moderating together with different elements of the know-how trade that boomed over the previous decade and accelerated within the pandemic, when companies adopted providers that might foster distant work.

Amazon Internet Providers leads the cloud infrastructure market, with virtually 39% share in 2021, in accordance with estimates from trade researcher Gartner. Microsoft’s Azure enterprise and Google Cloud are AWS’ high opponents.

Microsoft mentioned final week that income from Azure and different cloud providers, which the corporate would not report in {dollars}, grew by 31% from the prior yr, down from 35% within the earlier interval. Google mother or father Alphabet studies earnings after the bell on Thursday.

Income progress at AWS has usually decelerated since 2015 because the phase has turn into bigger and competitors has picked up. Within the fourth quarter, AWS generated $21.4 billion in income, representing 14% of complete Amazon income. Analysts polled by StreetAccount had anticipated $21.87 billion in AWS income.

In an interview late final yr on the firm’s annual Reinvent buyer convention, AWS CEO Adam Selipsky mentioned “we do see some prospects who’re doing a little belt-tightening now.”

The AWS division ended up with $5.2 billion in working revenue for the quarter, virtually double the revenue quantity for the complete firm. But it surely was down by virtually 2%. This was the primary quarter since at the very least 2015 wherein AWS failed to extend its working revenue yr over yr. The standalone AWS working margin, at 24.3%, has not been this slender since 2017.

In November, AWS launched supply-chain, clean-room and safety information storage providers at its Reinvent convention. Additionally within the quarter, AWS introduced the provision of information middle areas in Spain and Switzerland.

Analysts at Oppenheimer, who’ve the equal of a purchase ranking on Amazon, wrote in a report this week that their analysis indicated purchasers had been transferring to discounted time period contracts, optimizing workloads and seeing lighter utilization as “the digital financial system reverts considerably again to in-person.”

WATCH: Amazon Internet Providers income progress will decelerate extra in 2023, says Satori Fund’s Niles