A Big Tech bounce-back is imminent

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Editor's note: The earnings reports for the December quarter for the five Big Tech players—Apple, Amazon, Alphabet, Meta and Microsoft—have reinforced concerns about the decelerating cloud trends and the uncertainty about this revenue stream and its cyclicality. Cloud infrastructure and services have been the flag bearer of profits for the past few years for companies like Amazon and Microsoft, which together dominate the cloud market. The recent earnings reports of both the companies showed growth in the business was at its lowest. Google Cloud’s growth too has been the slowest since 2019, when the company began reporting the division’s numbers. The continued poor results reflect the stressed economic climate as well as a post-pandemic frugality by enterprise customers hit by dwindling demand, high inflation and rising interest rates. After the earnings reports last quarter—amid hundreds of billions of dollars being wiped from the market values—I wrote about how the resilience of Big Tech has its limits and the Teflon coating seems to be eroding. Since then, the fourth quarter earnings of the five companies as a whole are down 28% from the …