Data centre and cloud providers show mixed results for Q3 2022

In the data centre server processor race, AMD showed strong Q3 2022 results, up 45% from the previous year. This was tied to strong sales of the EPYC line of server processors; with increased revenue offsetting an increase in operating expenses.

On the other hand Intel, whose Xeon server processors are in direct competition with AMD’s EPYCs, found its data centre and AI group (DCAI) down 27% year-over-year. This contributed to the 20% loss in GAAP income compared to Q3 2021, however, the company attributes a significant portion of these losses to restructuring, cost reduction and efficiency improvements that will take effect 2023-2025.

Colocation data centre operators had a more consistent positive return over Q3 2022. Digital Realty reported a modest 5% increase in revenues compared to the same quarter in the previous year. Equinix had better luck, reporting a 10% increase in revenues over the same time period.

“Even in a complex and changing macro environment, our expansive global reach and robust interconnected ecosystems continue to attract a wide and diverse customer set,” said Charles Meyers, President and CEO of Equinix.

The three major players in cloud computing are feeling the effects of macroeconomic trends, including surging energy costs, supply chain disruptions, and global inflation.

Google Cloud Platform showed a revenue increase of 38%, while losses expanded to $699 million compared with $644 million in Q3 2021. Even while operating at a loss, however, GCP still beat analyst expectations for revenue. Analysts predicted $6.7 billion in revenue for the cloud provider for the quarter, while GCP actually achieved $6.9 billion.

Microsoft Cloud revenue increased by 24% year-over-year, but noted that margins for Azure and other cloud services had tightened, mainly due to increased energy costs. Amy Hood, Microsoft EVP and CFO said that the company was experiencing ‘over $800 million in greater-than-expected energy costs’.

Amazon is still the cloud computing market leader, showing record-breaking Q3 2022 revenues of $20.5 billion. While this represents a 27.5% growth from the previous year, it is a marked slowdown from the 33-37% growth rate of previous quarters. Amazon attributes this to the tendency for customers to cut budgets during a period of economic uncertainty.

Amazon CEO Andy Jassy said: “There is obviously a lot happening in the macroeconomic environment, and we will balance our investments to be more streamlined without compromising our key long-term, strategic bets.”

AWS was also hit with increasing energy costs, which contribute to smaller operating margins and offset revenue.

CFO Brian Olsavsky added: “With the ongoing macroeconomic uncertainties, we’ve seen an uptick in AWS customers focused on controlling costs.”

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