Cloud infrastructure stocks have been among the worst performers this year despite all the excitement around artificial intelligence (AI). In this report, we dive deeper into the drivers of the current underperformance and highlight the medium-term upside potential. Contents: Enterprises are cutting spend and optimizing cloud usage Not all cloud business models are the same – consumption vs. project-based AI breakthroughs will drive strong medium-term cloud demand Cloud Spend Optimization There are two effects that are driving a temporary slowdown in enterprise spending (1) fear of recession is forcing companies to cut spending (2) after two years of robust growth, companies are optimizing their spending. Fortune 500 decision-makers expect a dramatic slowdown in IT spending. Per a recent ETR survey, respondents expect 2023 IT spending to grow only 1.4% vs. 4.4% yoy only 2-3 months ago (based on data from over half of the Fortune 500). IT Spending of Organizations Interestingly, cloud spending is expected to fare worse than the average IT spending. In addition to broader slowdown in IT spend, companies are optimizing their cloud usage and delaying new projects. Spend Intent in Cloud vs Avg YoY Per Microsoft’s (NASDAQ: MSFT ) F2Q23 earnings call, the company expects […]
K&X Design and Investment Technology, LLC
Invest The Invisible Impact
K&X Design and Investment Technology, LLC
Invest The Invisible Impact
