You can now rest about declining cloud infrastructure expansion in 2023: It was cloudy again this quarter. Synergy Research reported a solid $13.5 billion market increase to $76 billion, up 21% from the first quarter of 2023.
Healthy growth by any metric. You undoubtedly predicted that generative AI and the massive data needed to construct models are driving the growth. AI is driving revenue for these companies, whether it’s Microsoft’s tight ties to OpenAI, Google Cloud’s recent customer conference announcements, or Amazon’s data infrastructure.
Rudina Seseri, founder and managing partner of Glasswing Ventures, which invests extensively in AI startups, said, “There is a symbiotic relationship between the rapid advancement and adoption of AI and the scalable ‘Big 3’ cloud infrastructure providers.” “AI makes cloud providers more valuable. As shown by their massive expansion in recent quarters, the Big 3 cloud infrastructure companies’ computational capacity is in high demand as enterprises automate and augment computing.
In the future years, Seseri expects cloud vendors will make building on their infrastructure easier for startups. “Many startups depend on cloud providers, having built on massive platforms. She said the big cloud platforms will invest heavily in AI-optimized infrastructure because it drives cloud computing growth and makes it easier to build AI platforms and products on the cloud.
The growing interest in this technology is benefiting these companies financially. Altimeter partner Jamin Ball says incentives started arriving in last quarter and continued throughout this one. Amazon cloud growth dipped to 12% in Q2 and Q3 last year, rising to 13% in Q4. The corporation actually delivered this quarter with $25 billion in revenue, up 17% year over year. The $100 billion run rate represents 31% market share.
Ball’s numbers show Azure keep killing it. The corporation has 25% market share and a $76 billion run rate, rising 31% year over year. Google’s 11% market share, up 28% YoY, is a solid third. Ball’s estimate includes Google Workspace, while Synergy’s is infrastructure and platform.
Cloud cost-cutting appears to be over. Although 2021 and 2022 growth numbers are unlikely to return, AI appears to be boosting cloud vendor growth.
“In terms of annualized run rate, we now have a $300 billion market, which is growing at 21% per year,” Synergy chief analyst John Dinsdale said. We won’t return to growth rates before 2022 because the market is too big to grow that fast, but we will see substantial growth. We expect it to double in four years.”
As organizations crave AI and data management, the cloud looks to be back in style. It may not be as flamboyant as back then, but it’s still very impressive for a maturing industry area, with all signals pointing to robust growth in the next years.