Canalys: Worldwide Cloud Spending to Grow 20% in 2024

Worldwide cloud infrastructure services expenditure grew 19% year-on-year in Q4 2023 to reach $78.1 billion, an increase of $12.3 billion. For full-year 2023, total cloud infrastructure services spending grew 18% to $290.4 billion, up from $247.1 billion in 2022.

According to Canalys, the influence of enterprise IT optimization on the cloud services market is falling, with more customers expanding their commitments with hyperscalers in anticipation of increased consumption requirements. Cloud migration efforts are picking up again, alongside a surge in new demand, particularly in the widespread adoption of AI applications. Hyperscalers are steadily ramping up investments in generative AI, expecting that harnessing its capabilities will catalyze new opportunities in cloud consumption. In 2024, Canalys expects global cloud infrastructure services spending to increase by 20%, compared with 18% in 2023.

In Q4 2023, the top three cloud providers – AWS, Microsoft Azure, and Google Cloud – jointly grew by 21% and accounted for 66% of total spending. In Q4, Microsoft Azure and Google Cloud saw a strong resurgence in revenue growth, both exceeding 25% once again. With 30% growth, Microsoft significantly outpaced the market and continues to close the gap on AWS. Market leader AWS saw an uptick in growth compared with previous quarters, but an increase of 13% year on year remains behind the trajectory of both Microsoft Azure and Google Cloud.

“AWS has been slower than its key competitors to make AI advances, which may explain why its growth is not accelerating as rapidly as that of Azure and GCP,” said analyst Yi Zhang. “The integration of generative AI into mainstream software products is accelerating, potentially leading to quicker commercialization of generative AI applications. Google recently introduced its rebranded Gemini large language model into Workspace applications, such as Gmail and Docs. At the same time, Microsoft launched Copilot for Microsoft 365 last November, embedding its generative AI platform into Word, Excel, and other office applications.”

Canalys defines cloud infrastructure services as those services that provide infrastructure-as-a-service and platform-as-a-service, either on dedicated hosted private infrastructure or shared public infrastructure. This excludes software-as-a-service expenditure directly but includes revenue generated from the infrastructure services being consumed to host and operate them.

Channel Impact^®

This trend underscores the need for channel partners to fully differentiate themselves in this highly competitive market.