‘Growth surge’ in the cloud market rolls on

With most of the major cloud providers having now unveiled their earnings for Q3, Synergy – which put together the report – 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. Generative AI is cited as a major factor behind the market acceleration.

This represents the fourth consecutive quarter in which the YoY growth rate has increased, according to Synergy, after softening growth rates during 2023. Public IaaS and PaaS services account for the bulk of the market and those grew by 24% in Q3.

Unsurprisingly it’s the big three gobbling up lion’s share of the market – collectively they accounted for 68% of it. Amazon maintains a ‘strong lead’, but Microsoft and Google had higher percentage growth numbers. Their Q3 worldwide market shares were 31%, 20% and 13% respectively, and all three saw growth rates increase from a year ago.

In terms of the best of the rest, Oracle, Huawei, Snowflake and Cloudflare were among the ‘tier two’ cloud providers with the highest YoY growth rates.

Countries with the strongest growth were listed as India, Japan, Brazil and Italy, which all growing at rates above the worldwide average. The US remains the biggest cloud market, and that grew by 23% in Q3. In Europe the largest cloud markets are the UK and Germany, Ireland, Italy and Spain clocked the highest growth rates.

“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,” said John Dinsdale, a Chief Analyst at Synergy Research Group. “Given the already massive size of the market, we are seeing an impressive surge in growth.

“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.”

In terms of who is spending the money on generative AI, telcos seem particularly hungry for it according to a study commissioned by SAS. It found that 70% of telcos – compared to an average of 54% across sectors – are currently using generative AI and have either fully implemented it or are running tests, whether that be with marketing, sales or IT.