According to the latest research report, in the first quarter of 2024, global enterprise cloud infrastructure service spending reached $76.5 billion, a year-on-year increase of $13.5 billion, an increase of 21%. Combined with the recent financial reports of major global cloud computing vendors for the first quarter of 2024, artificial intelligence (AI) has become a key driver for the global cloud computing market to maintain rapid growth.
Statistical chart of the global cloud infrastructure services market size
数据来源：国际研究机构Synergy Research Group
The total market share of the three major manufacturers is nearly 70%.
According to the latest data released by the international research institute Synergy Research Group, in the first quarter, Amazon AWS, Microsoft Azure and Google Cloud still ranked among the top three suppliers in the cloud service market, with market shares of 31%, 25% and 11% respectively, and the total market share of the three was as high as 67%, and the market showed a trend of further concentration to the head cloud computing vendors.
数据来源：国际研究机构Synergy Research Group
At the same time, the recent first-quarter financial reports released by these vendors also show that their cloud computing business volume has steadily increased and achieved continuous growth.
Amazon noted in its earnings report that its net sales in the first quarter were $143.3 billion, a year-on-year increase of 13%. Among them, Amazon cloud computing business AWS sales reached 25 billion US dollars, a year-on-year increase of 17%.
According to Microsoft's earnings report, its revenue for the quarter reached $61.9 billion, about $1 billion higher than expected. Among them, the Azure cloud business performed well, with revenue of $19 billion, a year-on-year increase of 31%, exceeding market expectations.
Google's parent company, Alphabet, also indicated that it achieved $80.54 billion in revenue in the first quarter, a year-on-year increase of 15%. Among them, Google's cloud services division, Google Cloud, achieved a significant increase of $9.57 billion, compared with $7.314 billion in the same period last year.
A Google Cloud executive introduced its intelligent cloud service at the Cloud Next conference
According to the analysis, the revenue growth rate of the three cloud computing market leaders has improved significantly in the past two quarters. Looking ahead, the businesses of these three companies are expected to continue their strong annual growth momentum, with the market size doubling within four years.
AI is a key driver
Industry experts pointed out that the technological iteration of AI is constantly leading new needs in the field of cloud computing, and AI is the key driver of business growth for the three major cloud computing providers.
During Microsoft's earnings call, Microsoft CEO Satya Nadella highlighted the critical role AI plays in business development. He noted that Microsoft's partnership with OpenAI is crucial, with AI-related demand already contributing 7% of Azure's revenue, or about $1.33 billion in incremental revenue. According to Nadella, more than 65% of the world's top 500 companies have used Microsoft's Azure Open AI cloud business, and the number of large transactions in this field is still accelerating. It's worth mentioning that Microsoft has recently reached a large-scale collaboration with The Coca-Cola Company and Cloud Software Group that spans several years and is worth more than billions of dollars. At the same time, Nadella also said that the number of orders for Microsoft's Azure cloud worth more than $100 million increased by more than 80% year-on-year, while the number of transactions worth tens of millions of dollars has more than doubled.
Microsoft showcased its cloud computing offerings at Mobile World Congress
During Alphabet's earnings call, Google CEO Sundar Pichai also fully expressed the importance of AI technology. He pointed out: "The introduction of AI technology will definitely bring an inflection point to the cloud business. AI solutions have become an absolute pillar of Google Cloud, with more than 70% of generative AI unicorns using Google Cloud services. In the past eight months, Google Cloud has released more than 1,000 new products and features in the field of cloud computing, and has helped more than 300 customers and partners around the world realize value empowerment. At the same time, Google's financial report data also shows that most of Google's unfulfilled contracts come from Google Cloud orders, which continued to grow by 14.2% quarter-on-quarter in the fourth quarter of last year, with a growth rate of 28%. This means that more enterprises are starting to adopt Google Cloud to support their AI-related businesses and projects, and the AI dividend has played a significant role.
Amazon CEO Andy Jassy focused on updating its next steps in the earnings call. "Thanks to the company's years of experience in cost optimization, Amazon AWS has basically completed most of the cost optimization work," said Jassy. In the next phase, we plan to shift our focus to modernizing our infrastructure and initiatives to create new value through generative AI. In addition, he also emphasized the important role of AI in driving the development of cloud computing services. Jassy pointed out that Amazon AWS already has billions of dollars in revenue from AI, and many companies are starting to build Gen AI applications for inference on AWS.
Heavy investment to "increase" AI infrastructure
After reaching a consensus on the important driving role of AI in the development of cloud computing, leading cloud computing enterprises pay more attention to the construction of AI infrastructure with a focus on future planning. This approach is reflected in these companies' capital expenditure plans for the next quarter.
At the end of April, Amazon Web Services spent $11 billion in the construction of new data centers. Brian Olsavsky, Amazon's chief financial officer, said, "In the first quarter, our capital expenditures amounted to $14 billion, which is expected to be the lowest level of capital expenditures in the quarter of the year. In 2024, Amazon will see a significant increase in capital spending, most of which will be used to support infrastructure, particularly in generative AI. ”
Amazon Web Services (AWS) cloud computing booth at the China International Fair for Trade in Services
Microsoft CFO Amy Hood revealed that Microsoft expects its capital expenditures to increase significantly on a quarterly basis. This quarter, Microsoft's capital expenditure reached $14 billion, and it is expected that the capital expenditure in the next quarter will increase significantly by 50%~70% quarter-on-quarter. According to foreign media reports, Microsoft's follow-up investment will be mainly used for GPU purchase and data center construction. In terms of GPUs, Microsoft plans to stock up on 1.8 million AI chips by the end of this year to double the stock of GPUs; In terms of data centers, Microsoft announced a series of data center investment plans in May, including a $2.2 billion investment in the first data center area in Malaysia and a €4 billion investment in a data center in France...... A person familiar with the matter pointed out that by the first half of 2027, Microsoft's investment in these two areas will reach $100 billion.
Google said it expects capital expenditures to be above $12 billion per quarter in 2024, with an annual growth of at least 49%. It is understood that the main use of this growth is to build and equip its data centers. It is reported that Google has spent $2 billion to build a new data park in April this year, and at the same time spent $1 billion to expand three data center parks. At the same time, the company also announced an initiative called the Google AI Opportunity Fund, which allocates $75 million as an AI skills training fund.
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Author丨Zhang QiweiEditor丨Zhao ChenmeiEditor丨Maria Producer丨Lian Xiaodong