Cloud & Software Growth May Be Stabilizing

We closely monitor Amazon, Microsoft, and Google’s cloud revenues to get a feel for where the market for software is going. Those companies cloud segments are Amazon’s AWS, Microsoft’s Intelligent Cloud, and Google Cloud Products. With Q2 coming to a close and all three companies reporting their financials, commentary on their cloud products and what it tells us about the direction of software buying is below.



Microsoft growth. Microsoft recorded $23.9bln of cloud revenue in Q2, representing growth of 15% year over year (“YOY”). That YOY growth shows a steady decline since Q4 2022, although we may be stabilizing at ~15%, given Q1 YOY growth was 16%.

AWS growth. AWS grew only 12% year over year, to $22bln in net sales for the quarter. That marks a deceleration from the prior quarter, when sales expanded 16%, and the slowest growth since 2015, when Amazon began breaking out cloud revenue. According to CEO Andy Jassy, “AWS growth stabilized as customers started shifting from cost optimization to new workload deployment, and AWS has continued to add to its meaningful leadership position in the cloud.” AMZN believes customers are shifting from cost optimization to spinning up new workloads in the cloud, but the slowest growth since inception is clearly a very negative datapoint for the overall cloud market. AWS appears to have not yet found the floor.

Google Cloud. Google’s Cloud recorded $8bln of Q2 2023 sales versus $6.2bln in Q2 2022, growth of 28% YOY. In Q1 2023, sales were $7.4bln versus $5.8bln in Q1 2022, which was also 28% YOY growth. Google’s growth may be showing stability, similar to Microsoft.

Conclusion. Cloud growth is coming from the ongoing trend in cloud migrations, which is a shift from traditional to cloud-based infrastructure. Additionally, the development and utilization of AI-based solutions are encouraging new, born-in-the-cloud AI-first workloads.

While growth in cloud sales is still slowing, which is not a good trend for the software market overall, Microsoft and Google indicate we may be finding some stability in the growth. We do believe the market is still “settling” from the ramp up we saw due to covid and work-from-home, and we are getting closer to finding the floor for cloud and software growth (hopefully).

Sammy is the Managing Partner and Co-Founder of Blossom Street Ventures. Visit us at and email directly at We invest in companies with run rate revenue of $3mm to $30mm, with year over year growth of 30%+. We lead or follow in growth rounds and special situations like inside rounds, small rounds, rushed rounds, corralling investors with our term sheet, cap table clean up, and extensions. We can commit in 3 weeks and our check is $1mm to $4mm. Also visit for always up-to-date SaaS metrics.