Worldwide cloud infrastructure services expenditure grew by 21% year-on-year in Q1 2024 to reach US$79.8 billion, an increase of US$13.4 billion, according to Canalys. The top three cloud providers - AWS, Microsoft Azure and Google Cloud - collectively grew by 24%, accounting for 66% of total spending.
► Enterprises are reevaluating entire technology stack
► More workloads will transition to cloud
► AI driving growth with integration to become the ‘norm’
All three hyperscalers experienced a growth rate surge, as enterprise cloud spending accelerated. Microsoft’s sales rose by 31% year-on-year, while AWS’s grew 17%, and Google Cloud 28% year-on-year. Canalys said that AI is an increasingly important demand driver of public cloud investment with demand driving hyperscalers to integrate AI-enabled features into their offerings and build strong partnerships.
All three of the top hyperscalers saw an increase in the number of multi-year commitments from enterprise customers, suggesting that many businesses are readying themselves for a long-term increase in cloud consumption. ‘There is significant variation in the strategies of the top three hyperscalers, reflected in their differing growth rates,’ said Yi Zhang, Analyst at Canalys. ‘Microsoft's end-to-end portfolio is proving to be a strong competitive moat, while Google's strength in AI is giving it a strong tailwind. However, AWS' recent US$4 billion investment in Anthropic for generative AI and its ongoing AI integration in its cloud services underscores a determination to stay ahead of the pack as business priorities shift to AI.’
Driven by AI, enterprises are re-evaluating their entire technology stack and creating a need to transfer their workloads and data to cloud platforms that provide additional computing and storage capacity. However, the transition process can be difficult and costly and this will potentially hinder AI adoption, said the firm.
‘The convergence of AI and cloud represents a transformative juncture, reshaping how businesses approach technology for innovation and growth. Businesses must navigate the complexities of optimising costs associated with AI infrastructure, including compute resources, storage and data processing, while ensuring that investments in AI technologies yield tangible returns,’ said Alex Smith, VP at Canalys.
‘Looking ahead, cloud service providers as a whole will endeavour to capitalise on this trend by embedding AI in their products and solutions, making AI integration not something novel, but the norm.’
