Cloud infrastructure market rebounds, rakes in $79B this quarter
What's the story
The cloud infrastructure sector has made a strong comeback after a slow 2023, with revenues hitting $79 billion in the recent quarter.
This represents a significant $14.1 billion or 22% increase from the same period last year, as reported by Synergy Research.
The surge marks the third consecutive quarter of year-over-year (YoY) growth exceeding 20%, largely fueled by interest in artificial intelligence (AI).
Future prospects
Market growth expected to continue despite uncertainties
John Dinsdale, Synergy's chief analyst, anticipates that the market will maintain its upward trajectory.
He forecasts it to double again within four years, despite potential political and economic uncertainties.
This prediction underscores the robustness of the cloud infrastructure sector amid global challenges.
Earlier, it took 13 quarters to grow from $40 billion to nearly $80 billion, a milestone that the market will soon exceed.
Performance review
Microsoft's Intelligent Cloud slightly misses revenue estimates
Microsoft Intelligent Cloud, which includes Azure, reported a slight miss on analysts' estimates this quarter with revenue of $28.52 billion against expectations of $28.68 billion, per CNBC.
However, Azure still saw a growth of 30%, according to Altimeter Capital partner Jamin Ball.
Dinsdale emphasized that the miss should not be overemphasized as Microsoft's Intelligent Cloud revenues were within the guidance range provided by Microsoft three months ago.
Tech giants
Amazon and Google Cloud report significant growth
Amazon reported a revenue of $26.3 billion for the quarter, marking a 19% increase over the previous year.
After dipping into the 12% and 13% range in early 2023, Amazon seems to have settled into this growth rate for now.
Google Cloud had a successful quarter as well, surpassing $10 billion for the first time and marking a 29% YoY increase.
Market dynamics
Share distribution among companies
The overall market share numbers were: Amazon at 32% (around $25 billion), Microsoft at 23% (around $18 billion), and Google at 12% (around $9.5 billion).
Despite losing around two percentage points of market share over last quarter, Microsoft continues to grow at a brisk rate.
Dinsdale attributed this drop to seasonality in the Azure sales cycle.
Market shift
Oracle surpasses IBM in cloud infrastructure market
In the next tier of firms, Oracle nudged up to 3%, surpassing IBM and tying Salesforce for fifth place overall.
While the Big 3 account for over 73% of the market, Oracle's 3% still represents over $2 billion in revenue.
This shift indicates a changing landscape within the cloud infrastructure sector beyond its dominant players.