In Q3 2024, global spending on cloud infrastructure services increased by 21% year on year, reaching $82.0 billion with the AI offerings of all three major hyperscalers fuelling growth.
► Growing reliance on AI for innovation and competitive advantage
► Cloud vendors need to balance investments in AI with cost discipline
The rankings of the top three cloud vendors – AWS, Microsoft Azure and Google Cloud – remained stable from the previous quarter, with these providers together accounted for 64% of total expenditure. Total combined spending with these three providers grew by 26% year on year, and all three reported sequential growth.
Market leader AWS maintained a year-on-year growth rate of 19%, consistent with the previous quarter. But it was outpaced by both Microsoft, with 33% growth, and Google Cloud, with 36% growth. In actual dollar terms, however, AWS outgrew both Microsoft and Google Cloud, increasing sales by almost US$4.4 billion on the previous year.
All three cloud hyperscalers reported positive returns on their AI investments, which Canalys said have now begun to contribute to their overall cloud business performance. It also said that there is a growing reliance on AI as a key driver for innovation and competitive advantage and more pressure for cloud providers to expand their infrastructure. In some cases, over-investment strategies have been adopted to ensure providers can scale their offerings in line with growing demand.
While their growth is expected to continue into 2025, Rachel Brindley, Senior Director at Canalys, said: ‘Continued substantial expenditure will present new challenges, requiring cloud vendors to carefully balance their investments in AI with the cost discipline needed to fund these initiatives. While companies should invest sufficiently in AI to capitalise on technological growth, they must also exercise caution to avoid overspending or inefficient resource allocation. Ensuring the sustainability of these investments over time will be vital to maintaining long-term financial health and competitive advantage.’
The three leading cloud providers are also updating their AI foundational models and continuously expanding their product portfolios with the goal of unlocking additional revenue streams.
