New data from Synergy Research Group shows that Q2 enterprise spending on cloud infrastructure services was $79 billion worldwide, up $14.1 billion or 22% from the second quarter of 2023. After seeing growth rates soften a little through much of 2023, this is the third consecutive quarter in which the year-on-year growth rate was 20% or more, with generative AI being one of the factors behind the market acceleration.
While some economic, currency and political headwinds remain, the fundamental strength of the market continues to push spending on cloud services to new highs. In terms of competitive positioning, Amazon maintains a strong lead in the market though Microsoft and Google again had higher percentage growth numbers. All three have seen their growth rates increase substantially since mid-2023. Their Q2 worldwide market shares were 32%, 23% and 12% respectively. Among the tier two cloud providers, those with the highest year-on-year growth rates include Oracle, Huawei, Snowflake and MongoDB. Oracle surpassed IBM this quarter and is now tied with Salesforce as the fifth largest cloud provider.
With most of the major cloud providers having now released their earnings data for Q2, Synergy estimates that quarterly cloud infrastructure service revenues (including IaaS, PaaS and hosted private cloud services) were $79.1 billion, with trailing twelve-month revenues reaching $297 billion. Public IaaS and PaaS services account for the bulk of the market and those grew by 23% in Q2. The dominance of the major cloud providers is even more pronounced in public cloud, where the top three account for 73% 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 far surpassing the whole APAC region. The US market grew by 22% in Q2. In Europe the largest cloud markets are the UK and Germany, but the big markets with the highest growth rates were Ireland, Italy and Spain.
“We are now seeing more normalized growth of the cloud market, though some speed bumps do remain. As one example, were it not for a strengthened US dollar, the Q2 growth rate would have been around one point five percentage points higher,” said John Dinsdale, a Chief Analyst at Synergy Research Group. “As the market pushes ever higher, the competitive dynamics continue to evolve. Amazon and Google’s share both nudged upwards in Q2 while Microsoft’s share dropped a little, though the trend lines for both Microsoft and Google continue heading upwards. Among the next group of companies, Oracle is now starting to separate itself to become a top five player, though the gulf between it and the leaders remains huge. In this market Google is almost five times the size of Oracle, while Amazon is almost three times the size of Google.”
