Economic Uncertainty Weighs on Cloud-Computing Divisions at Amazon and Microsoft

Demand for highly profitable cloud-computing services has slowed as businesses cut spending due to economic uncertainty.  As a result, earnings for Amazon.com (AMZN) and Microsoft (MSFT) may be affected when they report their quarterly results next week.  Analysts are projecting the slowest revenue growth for both companies’ cloud-computing businesses since their startups in 2006.

Robust demand for cloud-computing services has been a steady growth driver for both Amazon and Microsoft. However, some analysts are concerned that the weakness in the companies’ cloud-service businesses is not reflected in their share prices.  Robert Baird said not much of the cloud weakness is priced into the stocks that are up 20% or more this year and that “given how much they’ve run, the setup for earnings is horrible.”