- Cloud deals took about 50% longer than usual to close in the first quarter as customers cut their IT budgets.
- In the second quarter, the trading cycle will return to completion in about 30 to 60 days, according to a Mizuho Bank report.
- Demand for generative AI running in the cloud has helped stabilize.
A new survey of CIOs by Mizuho Bank found that drastic cuts in cloud computing budgets could subside thanks to generative AI, and Amazon Web Services could be a big beneficiary.
In anticipation of a recession, companies began cutting IT budgets last year, triggering the cloud computing industry’s first-ever slowdown. According to a Mizuho Bank survey of CIOs of 300 Fortune 1000 companies, about 50% more likely to close cloud deals than usual It was time consuming and around 30%-40% discounts across cloud services were common.
Since then, cloud deals have closed at a “normal” pace in the second quarter, with cloud providers mostly only conceding pricing when large customers sign multi-year deals, research shows. ing.
CIOs who focused on cutting cloud budgets in the first quarter are now looking to spend those savings on generative AI. As customers race to implement generative AI technology and buy the cloud storage and services needed to support it, AWS is poised to take advantage, says Mizuho’s report.
“Generative AI will drive the next super cycle of cloud adoption and accelerate the transition to mass markets in the coming years, as new technologies can only be deployed efficiently in the cloud,” says the report. .
According to the survey, customers are particularly excited about Bedrock, Amazon’s base model for developers to build generative AI, because of its privacy features. Mizuho Bank estimates that his AWS Bedrock, announced in April, won his list of 200 companies waiting to train and launch generative AI apps.
This could be a tailwind for market-leading cloud provider AWS. AWS reported its slowest growth rate to date in Q1 2023. An increase of about 16% pales in comparison to the about 40% growth AWS recorded in his first quarter of 2022. AWS continued to be profitable in the first quarter, but the slowdown continues. Bernstein technology analysts wrote at the time that it was “unwelcome.”
AWS’ biggest rival, Microsoft, has invested billions in OpenAI, the makers of ChatGPT. And earlier this year, Google introduced Bard, its own generative AI chatbot. Analysts have previously said AWS is lagging behind its competitors in the AI race. A survey by Mizuho Bank suggests that CIOs may feel differently.
