AWS Keeps ‘Strong Lead’ in Cloud Infrastructure

Amazon Web Services continues to lead in cloud infrastructure services, though rivals Microsoft Azure and Google Cloud are gaining ground.

That’s one of the key takeaways from new Synergy Research Group data assessing global enterprise spending on cloud infrastructure services in the first quarter of 2024.

AWS maintains “a strong lead in the market,” said John Dinsdale, a chief analyst at Synergy.

The research group pegged AWS’ share at 31%, Microsoft Azure at 25% and Google Cloud at 11%. Here are the other cloud infrastructure service providers’ figures, per Synergy:

Other providers with market share of 1% include Baidu, China Telecom, China Unicom, Fujitsu, NTT, Snowflake, SAP, Rackspace and VMware, Synergy said.

When it comes to year-on-year growth among Tier 2 cloud infrastructure services vendors, Huawei, Snowflake, MongoDB and Oracle stand out as the strongest, according to the firm.

Gen AI Fueling Cloud Infrastructure Growth

Around the world, enterprises spent 21% more on cloud infrastructure services in the first quarter than they did in the same period in 2023. In firm numbers, that translated to a $13.5 billion increase, surpassing $76 billion worldwide.

As for what propelled the growth? One guess: generative AI.

Related:Is AWS on Verge of Losing Its ‘King of Cloud’ Title?

Without a doubt, that connection was more than confirmed over the last week by the hyperscalers’ earnings reports. At AWS, sales ramped up by 17% in the first quarter, reaching $25 billion — once again nearing pandemic-era heights. The “cost optimization” effect is wearing off somewhat, Amazon executives said on April 30, and demand for generative AI is fueling new adoption.

Azure and Google Cloud, the second- and third-largest cloud providers, respectively, are seeing similar AI-related traction.

“Microsoft Copilot and Copilot stack are orchestrating a new era of AI transformation, driving better business outcomes across every role and industry," Satya Nadella, Microsoft’s chairman and CEO, told investors last week.

Microsoft's Satya Nadella

Sundar Pichai, CEO of Google parent Alphabet, praised Google Cloud’s AI momentum as well.

“We are well underway with our Gemini era and there’s great momentum across the company,” Pichai said. “Our leadership in AI research and infrastructure, and our global product footprint, position us well for the next wave of AI innovation.”

Synergy noted that this marks the second consecutive quarter in which the hyperscalers’ year-on-year growth rate has significantly improved. That timing does indeed coincide with the widespread launches of each company’s proprietary AI services and platforms to organizations. Overall, the first quarter experienced the strongest growth since the third quarter of 2022, even amid some ongoing, yet slightly diminished, economic, currency and political headwinds, the firm said.

Recent ‘Abnormally Low’ Cloud Growth A Thing of the Past

As far as a services breakdown, public IaaS and PaaS account for the bulk of the cloud infrastructure services market; they grew by 23% in the first quarter, per Synergy. The three hyperscalers claim 72% of the market.

Geographically, demand for cloud computing remains strong everywhere, but India, Japan, Australia and South Korea all grew by 25% or more year over year, Synergy found. Even so, the United States is still the largest market; its scale surpasses all of APAC, Synergy said. To that point, U.S. cloud infrastructure services consumption took off by 20% in the first quarter.

On the whole, the “abnormally low” cloud market growth rates of late 2022 and much of 2023 appear to be a thing of the past. But, Synergy’s Dinsdale cautioned, don’t expect hyperscalers’ earnings to match the halcyon days of COVID-19 deployments.

Synergy Research Group's John Dinsdale

“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,” he said. “We are forecasting that it will double in size over the next four years.”

In fact, when assessing annual run rates, cloud computing has become a $300 billion market growing at 21% per year, Synergy added.

“There is much for cloud providers to be cheerful about,” Dinsdale said.