Amazon: Early Signs of Problems in AWS Profitability

From a profitability perspective, AWS is by far the most important piece; without it, Amazon would be operationally unprofitable:

AWS growth continues to decelerate sharply to 16.0% YoY in constant currency terms as enterprises focus on reprioritizing spends:

AWS' remaining performance obligations (RPO) indicate the backlog of AWS-related spends, making it a leading indicator of AWS revenues. This metric has also seen a sharp growth deceleration over the past 2 quarters:

As both Microsoft and Google see meaningful sequential improvement trends in their cloud profitability margins, Amazon's AWS has seen margin declines:

In an increasingly competitive cloud services environment, there is elevated risk of whether Amazon would be able to make back the profitability concessions.

Amazon is suffering from an industry-wide cloud spending slowdown. However, I think the more idiosyncratic risks are in AWS being a laggard in the AI-driven opportunities compared to Microsoft's Azure and Google's Cloud Platform (GCP). Additionally, I believe there is a risk of Amazon conceding on AWS pricing too much as enterprises look to cut down their spends.