Don’t forget that DOCN is essentially cloud for SMB or startups.
What business cohort is most affected by the lack of low interest rate / private equity funding? Same group.
Plus in any business slowdown, the Magnificent 7 may slow growth, but little companies can just go out of business altogether.
Their stock runup made zero sense.
But then most of the recent stock runups aren’t fundamentally-based.
Who exactly is showing massive growth right now?
Using Saul language, we are back to praising 20-25% growth vs lamenting the “slowing growth” when hyper-growth companies would throttle down from 100% y/y growth to a mere 80% y/y growth.
I don’t think cloud is rebounding. I think it is share shift at best, with a side helping of AI use cases.
The cloud companies have muscled their way into the procurement/CFO mindsets of many Enterprise clients, with “Cloud Commits” where client gets a perceived discount if they pledge to spend “X”.
But wait…economy is soft, or perception is that softness is coming, so everyone downsizes slightly, employs costs controls, and tries to shore up their profit bottom line to wall street, to slap lipstick over the pig that is their slowing growth.
Ok…but if budgets are slashed, what do you do if you are trying to reign in IT spend, but need to meet your Cloud Commit or risk a financial penalty? Why you shift an on-prem workload over to the cloud, if possible, and if it helps drawdown your Commit number.
It is all a shell game now.
As recession hits, the bottom line gets crushed too, and so do your stock prices.
But, yes, if you look really really closely, there may be the slightest bump for software companies that gain when cloud titans gain. But reality is the overall cloud growth has slowed considerably, so the tailwinds are much weaker for all.