A Robust and Flourishing Cloud Ecosystem Hits $427 Billion in the First Half

RENO, NV, September 24, 2024

New data from Synergy Research Group shows that across cloud service and infrastructure markets, operator and vendor revenues for the first half of 2024 reached $427 billion, having grown by 23% from the first half of 2023. Within that, one trend has flipped around recently. For a long time now the growth rate in cloud services has far outpaced growth in spending on cloud data center infrastructure, but that has temporarily switched around, driven by heavy investments in generative AI technology. In the first half, growth in IaaS, PaaS and SaaS averaged 21%, while spending on public and private cloud data centers grew by an average of 30%. However, the cloud services market does remain twice the size of spending on supporting data centers. As hyperscale operators continue to drive the broader IT market, so too does their infrastructure footprint grow. Compared with the first half of 2023 the operational capacity of their already huge data center network grew by 24%. More impressively, the size of their pipeline of future data centers grew by 47% as they continue to ramp up investments. Across SaaS and cloud infrastructure services, the overall market leaders are Microsoft, Amazon, Google and Salesforce. In data center hardware and software, ODMs continue to account for a large block of the market as hyperscale operators use their own-designed servers, supplied by contract manufacturers. Beyond ODMs, the market leaders are Dell, Microsoft, Super Micro and HPE. Here, Nvidia is rapidly growing its influence as it sells to server vendors, other technology companies, enterprises, and directly to hyperscale operators. Geographically, while cloud markets are growing strongly in all regions of the world, the United States remains a center of gravity. In the first half of 2024, the US accounted for 44% of all cloud service revenues, 53% of hyperscale data center capacity, and 47% of the market for cloud data center hardware and software. Across all service and infrastructure markets, the vast majority of leading players are US companies, followed by Chinese companies who account for 8% of all cloud service revenues and 16% of hyperscale data center capacity.

“Cloud markets were already growing strongly and AI has now supercharged some of that growth. We see this particularly in the rollout of new and expanded hyperscale data centers,” said John Dinsdale, a Chief Analyst at Synergy Research Group. “One interesting aspect of this is the way in which it is changing the structure of the supply side of the industry. Over the last ten years ODMs have continued to eat up server market share, and now we see Nvidia’s explosive growth, which is largely fueled by sales to hyperscalers, either directly or indirectly. In the first half, revenues from Nvidia’s data center business unit far surpassed the combined revenues of Dell and HPE in data centers.”