New data from Synergy Research Group shows that Q3 enterprise spending on cloud infrastructure services was $84 billion worldwide, up $15.7 billion or 23% from the third quarter of 2023. After seeing growth rates soften through much of 2023, this is now the fourth consecutive quarter in which the year-on-year growth rate has increased, with generative AI being a major factor behind the market acceleration. While some economic, currency and political headwinds remain, the fundamental strength of the market continues to push spending on cloud services to new highs.
In terms of competitive positioning, Amazon maintains a strong lead in the market though Microsoft and Google again had higher percentage growth numbers. All three have seen their growth rates increase from twelve months ago, with particularly strong improvements at Amazon and Google. Their Q3 worldwide market shares were 31%, 20% and 13% respectively. Among the tier two cloud providers, those with the highest year-on-year growth rates include Oracle, Huawei, Snowflake and Cloudflare.
With most of the major cloud providers having now released their earnings data for Q3, Synergy estimates that quarterly cloud infrastructure service revenues (including IaaS, PaaS and hosted private cloud services) were $83.8 billion, with trailing twelve-month revenues reaching $313 billion. Public IaaS and PaaS services account for the bulk of the market and those grew by 24% in Q3. The dominance of the major cloud providers is even more pronounced in public cloud, where the top three account for 68% of the market. Geographically, the cloud market continues to grow strongly in all regions of the world. When measured in local currencies the major countries with the strongest growth included India, Japan, Brazil and Italy, all growing at rates above the worldwide average. The US remains by far the largest cloud market, with its scale far surpassing the whole APAC region. The US market grew by 23% in Q3. In Europe the largest cloud markets are the UK and Germany, but the big markets with the highest growth rates were Ireland, Italy and Spain.
“Over the last four quarters the market has grown by almost $16 billion, while over the previous four quarters the respective figure was $10 billion. Given the already massive size of the market, we are seeing an impressive surge in growth,” said John Dinsdale, a Chief Analyst at Synergy Research Group. “While some market headwinds have diminished, it is undoubtedly AI that is a prime factor behind this increased growth rate. New AI-oriented services and technology are helping the major cloud providers to ride a wave – new capabilities lead to increased demand, which leads to increased revenues, which then enables more investment in underlying technologies.”
