The lull of last year is in review
If you were If you’re worried about cloud infrastructure growth temporarily slowing in 2023, you can finally relax: the cloud was back with a vengeance this quarter. According to Synergy Research, the overall market rose a whopping $13.5 billion to $76 billion, up 21% from the first quarter of 2024.
This is healthy growth in every respect.
If you’re wondering what’s driving the growth, you’ve probably guessed that it’s related to generative AI and the large amount of data required to build the underlying models. Whether it’s Microsoft’s deep ties to OpenAI, Google Cloud’s numerous AI announcements at its recent customer conference, or Amazon’s infrastructure that manages the data side of the equation, AI is driving these vendors’ businesses.
And these companies are benefiting from the newfound interest in this technology. Altimeter partner Jamin Ball reports that these rewards began in the last quarter and the ball continued to roll this one. Amazon cloud growth had fallen to just 12% in the second and third quarters of last year and rose slightly to 13% in the fourth quarter. But the company upped the ante this quarter with revenue of $25 billion, up 17% year over year. That’s a run rate of $100 billion, good for a 31% market share.
Ball’s numbers suggest Azure continues to kill it. The company now has a 25% market share, a run rate of $76 billion, up 31% year-over-year. Google is in third place with 11% market share, up 28% year-over-year (although it’s important to note that Ball’s numbers include Google Workspace and Synergy’s numbers are infrastructure and platform numbers only).
Photo credit: Jamin Ball
The days of cutting costs in the cloud seem to be over. And while we likely won’t return to the huge growth numbers of 2021 and 2022, AI appears to be driving a new wave of significant growth for cloud providers.
“In terms of annual run rate, we now have a $300 billion market growing at 21% annually,” Synergy principal analyst John Dinsdale said in a statement. “We will not return to pre-2022 growth rates as the market has become too large to grow that quickly, but we will see the market continue to grow significantly.” We expect the size to increase in the will double in the next four years.”
As enterprises’ continued push for AI and associated data management increases, the glory days of the cloud appear to have returned. The growth may not be as flashy as it was back then, but it’s still pretty darn good for a mature industrial sector, and all signs point to solid growth in the coming years.
Photo credit: Synergy research