Last year’s doldrums are in the rearview
If you were concerned about slowing cloud infrastructure growth for a time in 2023, you can finally relax: The cloud was back with a vengeance this quarter. The market as a whole was up a healthy $13.5 billion to $76 billion, up 21% of the first quarter in 2024, per Synergy Research.
That’s healthy growth by any measure.
If you’re wondering what’s driving the growth, you probably guessed that it’s related to generative AI and the copious amount of data required to build the underlying models. Whether it’s Microsoft’s close links to OpenAI, Google Cloud making a slew of AI announcements at its recent customer conference, or Amazon’s infrastructure managing the data side of the equation, AI is driving lots of business for these vendors.
And these companies are reaping the financial windfall for the newfound interest in this technology. Altimeter partner Jamin Ball reports that those rewards started coming in last quarter, and the ball kept on rolling into this one. Amazon cloud growth had dropped as low as 12% in Q2 and Q3 last year, climbing a bit to 13% in Q4. But the company really kicked it up a notch this quarter with revenue of $25 billion, up 17% over the prior year. That’s a $100 billion run rate, good for 31% market share.
Ball’s numbers indicate that Azure continues to kill it. The company now has 25% market share, good for a $76 billion run rate, up 31% over the previous year. Google is a strong third with 11% market share, up 28% YoY (although it’s important to note that Ball’s number includes Google Workspace, and Synergy’s numbers are only infrastructure and platform numbers).
Image Credits: Jamin Ball
The days of cost cutting in the cloud appear to be over. And although we probably aren’t going back to the heady growth numbers of 2021 and 2022, AI seems to be bringing a new wave of substantial growth to the cloud vendors.
“In terms of annualized run rate, we now have a $300 billion market, which is growing at 21% per year,” Synergy’s chief analyst John Dinsdale said in a statement. “We will not return to the growth rates seen prior to 2022, as the market has become too massive to grow that rapidly, but we will see the market continue to expand substantially. We are forecasting that it will double in size over the next four years.”
As companies’ continuing thirst for AI and the data management related to that grows, it seems that the cloud glory days are back. The growth may not be as gaudy as back in the day, but it’s still pretty darn good for a maturing industry sector with all signs pointing to solid growth in the coming years.
Image Credits: Synergy Research
