AI Boosts Global Cloud Computing Industry with Record Growth in Q4

Thanks to the development of AI technology, the cloud computing industry is accelerating once again.

According to Synergy Research data, the total expenditure of the global cloud computing industry in the fourth quarter of 2023 reached approximately $74 billion, with a MoM increase of $5.6 billion, setting a new record for MoM growth rate. The cloud computing market size grew by 19% compared to 2022.

The cloud market continues to grow strongly in all regions. In terms of regions, the growth in the Asia-Pacific region is the strongest, with India, China, Australia, and Japan all experiencing annual growth rates of over 20%. The United States remains the largest cloud market to date, with a market size larger than the entire Asia-Pacific region, and the market size in the fourth quarter grew by 16%.

Synergy estimates that the global cloud computing industry's revenue in the fourth quarter was $73.7 billion, and the annual revenue for 2023 is expected to reach $270 billion.

According to John Dinsdale, an analyst at Synergy, the market size will continue to grow with the help of AI. Dinsdale said:

"Cloud computing is a large-scale market that requires a lot of effort to make progress, but artificial intelligence has already achieved this."

However, Dinsdale also pointed out that as the growth rate stabilizes, cloud computing spending will continue to increase significantly year by year:

"Looking ahead, the law of large numbers predicts that the cloud computing market will never return to the growth rate before 2022, but the growth rate will indeed stabilize from now on, resulting in continuous significant growth in cloud spending every year."

Other analysts also suggest that the growth rate may slow down. Jamin Ball, a partner at Altimeter Capital, wrote:

"The giants are indeed seeing smooth growth in new workloads that offsets and surpasses the headwinds brought by cloud optimization." "And large enterprises have advantages in scale, distribution, credibility, and deep customer relationships, which give them an edge over other companies, and AI revenue (mainly computing revenue) will appear earlier in these companies."

This means that the advantages of giants in AI and other areas may have reached their peak in contributing to the growth of cloud computing businesses. However, for this industry, "whether to grow" seems to no longer be important. What is more important is who will stand out in this competition?

Currently, Microsoft, Amazon, and Google dominate the cloud computing market.

According to Synergy's data, although Amazon's market share decreased by 2 percentage points MoM, it still ranks first with a market share of 31%. Microsoft's partnership with OpenAI has helped Microsoft strive for the top, with a MoM increase in market share of 2% to 25% in the fourth quarter. Google's market share remains stable at around 11%.

The market share of these three companies accounts for a staggering 67%. If the cloud computing revenue not included in the financial reports is also taken into account, the total cloud computing revenue for the three companies in this quarter is approximately $50 billion: Amazon is $23 billion, Microsoft is $18.5 billion, and Google is about $8 billion. Quarterly growth rates: AWS cloud service revenue for Amazon increased by 13%, Azure cloud computing business revenue for Microsoft increased by 30%, and Google Cloud business revenue increased by approximately 25%.

Some believe that after partnering with OpenAI last year, Microsoft has taken a leading position in the field of artificial intelligence and may surpass Amazon to become a potential winner in the cloud computing market.

Scott Raney, a partner at Redpoint, stated in December last year, "Everything Microsoft is doing around Copilot means that they are 100% catching up (to Amazon)."