Public Cloud Spending ‘to Eclipse the $1 Trillion Mark': Gartner

If you think public cloud computing is a cash cow, you’re right. 

New findings from research firm Gartner pile on to other, recent analyst assessments that show generative AI is pushing cloud adoption to new heights. And Gartner’s numbers show the figure jumping by almost $100 billion more than 2023.

To that point, Gartner said on May 20 that, globally, end-user spending on public cloud services will total $675.4 billion this year. That’s a 20.4% increase over last year, when the same outlay amounted to $561 billion, per Gartner. (It’s also just slightly lower than what the firm predicted in November, when it said public cloud spending would hit $678.8 billion in 2024.)

The key drivers? Generative AI and application modernization, according to Gartner (and those track with previous predictions).

“The continued growth we expect to see in public cloud spending can be largely attributed to gen AI due to the continued creation of general-purpose foundation models and the ramp-up to delivering gen AI-enabled applications at scale,” said Sid Nag, vice president analyst at Gartner.

Gartner's Sid Nag

But here’s the kicker: Public cloud computing demand doesn’t look to let up any time soon. In fact, “we expect public cloud end-user spending to eclipse the $1 trillion mark before the end of this decade,” Nag said. 

Which Segments Lead the Public Cloud Market?

Every segment of the cloud computing market will go higher this year, Gartner said. Infrastructure as a service will lead the way, seeing the most spending growth of 25.6%. That’s not a surprise. Generative AI and application modernization can’t happen without optimal cloud infrastructure.

“IaaS continues at a robust growth rate that is reflective of the Gen AI revolution that is underway,” Nag said. “The need for infrastructure to undertake AI model training, inferencing and fine tuning has only been growing and will continue to grow exponentially and have a direct effect on IaaS consumption.”

Next up, platform as a service will experience 20.6% growth, topping $172 billion.

And cloud application services will follow at 20%, Gartner said, reaching $247.2 billion this year alone. In fact, SaaS still claims the largest portion of the cloud market in terms of end-user spending, the firm noted. Similar to the predictions around infrastructure consumption, this comes as little surprise. Most software applications now are delivered on a recurring, subscription basis. Enterprises and other buyers don’t, for the most part, have the choice to purchase a one-time software license anymore. 

Here’s how Nag positioned the situation: “SaaS spend is driven by applications being modernized by independent software vendors to run in a SaaS-based consumption model,” said Nag. “Organizations continue to increase their usage of cloud for specific use cases such as AI, machine learning, internet of things and big data, which is driving this SaaS growth.”

Gartner’s predictions for public cloud computing spending into 2025 show even higher numbers. By the time next year rolls around, the analyst firm forecasts IaaS to claim 29.1% of the market, followed once again by PaaS, at 22.7%, and SaaS at 19.4%.