Cloud Fight: AWS Leads, But Azure, Google Cloud Tout Bigger Growth

Enterprise spending on cloud infrastructure services rose 23% during the third quarter compared to the year-ago quarter, while Amazon maintains a strong lead in the market.

That’s according to Synergy Research Group. Cloud infrastructure services spending totaled $84 billion worldwide, up $15.7 billion.

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. The fundamental strength of the market continues to push spending on cloud services to new highs despite some economic, currency and political headwinds.

Synergy Research Group's John Dinsdale

“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.”

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Cloud Infrastructure Services Leaders

While Amazon maintains a strong lead in the market, Microsoft and Google again had higher percentage growth numbers. All three have seen their growth rates increase from one year ago, with particularly strong improvements at Amazon and Google. Their third-quarter worldwide market shares were 31%, 20% and 13%, respectively.

Among the tier-two cloud providers, Oracle, Huawei, Snowflake and Cloudflare had the highest year-on-year growth rates.

With most of the major cloud providers having now released their third-quarter earnings data, Synergy Research Group estimates quarterly cloud infrastructure service revenues, including IaaS, PaaS and hosted private cloud services, were $83.8 billion, with trailing 12-month revenues reaching $313 billion.

Public IaaS and PaaS services account for most of the market and those grew by 24% during the third quarter. 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 are growing at rates above the worldwide average.

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The United States remains by far the largest cloud market, with its scale far surpassing the whole APAC region. The U.S. market grew by 23% during the quarter. In Europe, the largest cloud markets are the United Kingdom and Germany, but the big markets with the highest growth rates were Ireland, Italy and Spain.