Thanks to AI, last year's downturn is forgotten.
Those who were worried about a temporary slowdown in cloud infrastructure growth in 2023 can finally rest easy. Cloud came back with a bang this quarter. According to Synergy Research, the overall market increased by $13.5 billion to $76 billion, an increase of 21% from the first quarter of 2024.
That's healthy growth no matter how you look at it.
If you're wondering what's driving growth, you'd probably guess it has something to do with generative AI and the large amounts of data needed to build the underlying models. Whether it's Microsoft's close relationship with OpenAI, Google Cloud's numerous AI announcements at its recent customer conference, or Amazon's infrastructure managing the data side, AI is driving the business of many of these vendors. I am.
Rudina Seseri, founder and managing partner of Glasswing Ventures, which invests heavily in AI startups, said, “The rapid advancement and adoption of AI and the scalable 'big three' cloud infrastructure providers There is a symbiotic relationship.” “AI actually increases the value of cloud providers. As the tremendous growth in recent quarters has demonstrated, by further enhancing computing capabilities through automation and scaling within the enterprise, Demand for the underlying computing power provided by the Big 3 cloud infrastructure vendors will increase accordingly.”
Seseri also believes cloud vendors will make it easier for startups to build on their infrastructure in the coming years. “Many startups rely on cloud providers that are built on these huge platforms. AI is a key driver behind the continued growth of cloud computing, and AI platforms in the cloud “We predict we will see significant investment in AI-optimized infrastructure by major cloud platforms as it will be easier to build products and services,” she said. .
And these companies are reaping financial benefits from renewed interest in this technology. Altimeter partner Jamin Ball reports that these rewards started accruing last quarter and the ball continued to roll into this quarter. Amazon cloud growth rate had declined to 12% in the second and third quarters of last year, but rose slightly to 13% in the fourth quarter. However, the company took its revenue up another notch this quarter, hitting its $25 billion mark, up 17% year-over-year. This equates to his $100 billion run rate and 31% market share.
Ball's numbers show that Azul continues to kill Ball. The company currently has a 25% market share, representing a 31% year-over-year increase in his $76 billion run rate. Google is in a strong third place with 11% market share, up 28% year over year (although Ball's numbers include Google Workspace and Synergy's numbers include infrastructure and platform It is important to note that the numbers are only for
Image credit: Jammin Ball
The days of reducing costs with the cloud seem to be over. And while we probably won't see a return to the dizzying growth numbers of 2021 and 2022, AI appears to be driving a new wave of significant growth for cloud vendors.
“At an annual run rate, it's currently a $300 billion market and growing at 21% annually,” John Dinsdale, chief analyst at Synergy, said in a statement. “The market will not return to pre-2022 growth rates as it has become too large to grow that quickly, but the market will continue to expand significantly. is expected to double.”
As enterprise enthusiasm for AI and its associated data management continues to grow, it seems like the glory days of the cloud are back. While this growth may not be as flashy as it was back then, there are every signs of solid growth in the coming years, and it's still a pretty good number for a mature industry sector.
Image credit: Synergy Research