Huge Cloud Market Sees a Strong Bounce in Growth Rate for the Second Consecutive Quarter

RENO, NV, April 30, 2024

New data from Synergy Research Group shows that Q1 enterprise spending on cloud infrastructure services was well over $76 billion worldwide, up $13.5 billion or 21% from the first quarter of 2023. This is the second consecutive quarter in which the year-on-year growth rate has markedly improved, with Q1 seeing the strongest growth since the third quarter of 2022. Though they have diminished somewhat, there are still some economic, currency and political headwinds. However, the underlying strength of the market is more than compensating for those constraints, aided in no small part by the impact of generative AI technology and services. In terms of competitive positioning, Amazon maintains a strong lead in the market though Microsoft and Google had the stronger year-on-year growth numbers. All three saw their growth rates increase substantially in the last two quarters. Their Q1 worldwide market shares were 31%, 25% and 11% respectively. Among the tier two cloud providers, those with the highest year-on-year growth rates include Huawei, Snowflake, MongoDB and Oracle.

With most of the major cloud providers having now released their earnings data for Q1, Synergy estimates that quarterly cloud infrastructure service revenues (including IaaS, PaaS and hosted private cloud services) were $76.5 billion, with trailing twelve-month revenues reaching $283 billion. Public IaaS and PaaS services account for the bulk of the market and those grew by 23% in Q1. The dominance of the major cloud providers is even more pronounced in public cloud, where the top three account for 72% of the market. Geographically, the cloud market continues to grow strongly in all regions of the world. When measured in local currencies the APAC region had the strongest growth, with India, Japan, Australia and South Korea all growing by 25% or more year over year. The US remains by far the largest cloud market, with its scale surpassing the whole APAC region. The US market grew by 20% in Q1.

“Synergy reported that in late 2022 and through much of 2023 cloud market growth rates were abnormally low, held back by external factors. We forecast that growth rates would bounce back and that is what we are now seeing,” said John Dinsdale, a Chief Analyst at Synergy Research Group. “In terms of annualized run rate we now have a $300 billion market which is growing at 21% per year. 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. We are forecasting that it will double in size over the next four years.”