Ai Platforms
Cloud Earnings Review: Signs of Stabilization
The rise of generative AI has necessitated hyperscalers to develop their own large language models (LLMs), build platforms that enable their customers to create AI applications, and also offer AI in their product offerings. AI has been a boon for hyperscalers that were otherwise affected by tightening budgets due to challenging macro conditions. We have been following the cloud sector closely with a regular review of hyperscalers and the best-of-breed cloud companies. This analysis shows that the hyperscalers are showing signs of stabilization. In a positive development, the best-of-breed cloud company’s expected sequential deceleration is slowing from a decline of 11 points in Q1 to Q2 of this year to a decline of 4 points in Q3 to Q4 of this year. This means we may near a bottom. We also discuss various financial metrics that can help determine which cloud companies will lead once the declining growth does find a bottom.
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