Amazon’s cloud business just recorded its weakest growth to date and missed analysts’ estimates

Amazon said Thursday that revenue growth in its cloud-computing unit slowed in the third quarter to 27.5%, missing analysts’ estimates. It’s the slowest expansion since at least 2014, the year Amazon started reporting on the group’s finances.

Revenue at AWS came in at $20.5 billion, according to a statement, while analysts polled by StreetAccount had expected $21.1 billion. Revenue grew 33% in the second quarter. AWS now contributes 16% of Amazon’s total revenue.

AWS, which Amazon launched in 2006, controlled about 39% of the cloud infrastructure market in 2021, down from 41% in 2020, according to estimates from technology industry researcher Gartner. Google, Huawei and Microsoft all gained share last year, Gartner said. The industry has seen steady growth as businesses continue to offload their computing and storage to the cloud.

Operating income for the division was $5.4 billion, less than the StreetAccount consensus of $6.37 billion. Amazon as a whole had $2.53 billion in quarterly operating income. AWS operating margin contracted to 26.3% from 29% in the second quarter.

During the quarter AWS launched its second cloud data center region in the United Arab Emirates, and it announced the availability of “serverless” services that help developers deploy data-analytics tools with minimal server-management work.

Amazon has slowed the pace of hiring in AWS, even as it continues to grow faster than the company’s core e-commerce business. In some parts of AWS, Amazon has met its hiring needs, while in others it has thousands of job openings, an AWS spokesperson told CNBC earlier this week. The comments came as Google and Microsoft also indicated they would reduce headcount growth.

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