I’m watching public company earnings to identify early weaknesses in the software market. This week Microsoft, Google/ Alphabet, & Amazon report their figures.

Today, Microsoft & Google revealed the health of their infrastructure business units.

Good news & bad news. Microsoft Azure grew 40% y/y, declining six percentage points from the previous two quarters. The relatively modest decline suggests the cloud market is quite strong.

Google’s growth rate fell to 35%, a 29% decline from the trailing 4 quarter average of 49% annual revenue growth. GCP’s data point is less rosy.

Why do these results diverge? Here are some hypotheses:

1. Google may have greater customer concentration in GCP than Azure. Declines in some large customers’ spend may impact results more than Azure.
2. Google may have greater sector exposure to clients that are suffering through a recession: retail, ecommerce, & advertising-based businesses. Snap’s weaker-than-expected earnings suggest ad spend declines should continue. Google’s annual ad business’ growth rate halved from 22% to 11%, lending credence to this idea.
3. Microsoft Azure may have more customers under fixed contracts compared to Google, which may have more customers on a usage-based pricing model. UBP spend fluctuates by the month and introduces more volatility into bookings.

I bet it’s some combination of the three.

Regardless, Amazon’s data will break the tie Thursday. AWS is the largest infrastructure provider by revenue, so its trajectory will shed more light on the patterns of software buyers.