---
title: "Grey Skies in Cloud Earnings"
description: "Analyzing Q3 cloud earnings: Azure, AWS \u0026 GCP show 25% growth slowdown. Key data reveals market shifts impacting SaaS valuations \u0026 startup spend."
categories: ["fundraising","sales","startups"]
keywords: ["cloud earnings","Microsoft Azure","Amazon Web Services","Google Cloud Platform","SaaS valuations","venture capital","software market slowdown","startup funding","Tomasz Tunguz"]
ai_summary: "Analysis of Q3 cloud earnings reveals a significant slowdown in growth rates for major cloud providers, impacting SaaS valuations."
date: 2022-10-28
lastmod: 2026-07-23
canonical_url: https://www.tomtunguz.com/q32022-cloud-earnings/
author: "Tomasz Tunguz"
---

I'm watching [public company earnings to identify early weaknesses in the software market](https://tomtunguz.com/the-index-of-software-buyers/). This week Microsoft, Google/ Alphabet, & Amazon reported their third quarter figures. 

| Company | Q-5 CAGR    | Q-4 CAGR  | Q-3 CAGR  | Q-2 CAGR  | Q-1 CAGR | Q0 CAGR |
| ----    | ---: | ----:     | ---:     | ----:     | ---:  | ---: |  
| Microsoft Azure           | 50%    | 51%    | 46%   | 46%   |  40% | 35% | 
| Google Cloud Platform    | 46%    | 54% | 45% | 51% |  35% | 38% | 
| Amazon Web Services | 37%    | 39% | 40%   | 40% | 33% | 27% | 

The meaningful decline in growth rates started four quarters ago is hard to ignore.

![image](https://res.cloudinary.com/dzawgnnlr/image/upload/co68b8xfjofqhgyw2ome.png)
Let's put these figures into context. Infrastructure revenue growth averaged 33% this quarter, which is astounding considering we're talking about businesses that sum to more than $50b of revenue per quarter. 

Customers spent $12b more this quarter. At a 7x multiple of revenue, that is another $84b of market cap creation, in theory. 

But, the change in slope is meaningful, too. A year ago, these business units grew at 44% annually. The current recession is evident in the charts: growth rates have declined by 25% in six months' time.

The kink downwards in the red line at Q-2 shows a sudden deceleration in AWS' growth rate. GCP is more volatile, likely driven by the volatility of bigger deals closing on a smaller revenue base. Meanwhile, Azure has declined in a more steady cadence.

The data suggests a broader slowdown in software spending as these companies are [indices of software buyers' behavior](https://tomtunguz.com/the-index-of-software-buyers/).

Public software multiples - [4.9x as of last week](https://tomtunguz.com/rates-and-multiples-2022/), not far from the decade low of 3.3x - should depress further given these results & forward guidance. Microsoft stock is down 10%; Amazon fell about 20%; Google about 12%. 

Lopping another 15% off multiples implies the median software company should trade at 4.2x forward revenues, a far cry from the 15x we observed not twelve months ago.