The cloud computing market landscape, relatively unknown since its inception in the mid-2000s, is now a booming vertical driving competition among Wall Street investors and tech mammoths alike. Today, almost every aspect of business seems to rely on cloud computing technology–the on-demand availability of computer system resources, especially data storage and computing power, without direct active management by a user.
While many analysts are focusing on the leaders of this industry (Google Cloud, AWS, and Azure) to lead the race, a growing number of new cloud-based technologies, companies, and data centers are driving semiconductor supply chains and demand forecasts.
In the AlphaSense platform, we’ve seen an increasing number of documents mentioning the cloud market and how various verticals, companies, and experts are approaching the conversation. Below, we share the developments that every tech forecaster, investor, and strategist should know going into 2023.
Related Reading: 10 Market-Moving Trends to Watch in 2023
Topics Dominating the Cloud Market Conversation
As the gold rush of cloud technology heightens, so too does the number of companies joining the conversation. Not only have we seen more companies discuss how macroeconomic events are shaping the cloud market and the supply chains across various industries, but how the variations of cloud tech, data privacy and the Internet of Things play into potential investments.
In the platform, companies like Microsoft continuously report quarterly revenues meeting or surpassing their intended goals–even in our current volatile market–signifying that businesses across various industries are recognizing and leveraging digital technologies like the cloud to overcome challenges. While some sectors are more impacted than others due to events that are currently unfolding, like the ongoing semiconductor-chip supply chain challenges and new developments with the Russian-Ukrainian War, there is strong demand for cloud-based technologies to be implemented into most, if not every, business practice.
“Cloud demand is going to remain better than other segments of the market even as the economic environment proceeds along the trajectory that most people expect because there is going to be a desire from companies to find a way to cut costs, to convert capital expenditures into operating expenditures through the use of the cloud to defer IT, CapEx and use cloud more and things like that,” says Sumit Sadana, Executive VP & Chief Business Officer of Micron Technology, in a Q4 2022 earnings call.
As supply chains continue to take impact from these events, companies seem to be investing in a variety of cloud-based supply chain software that can combat the challenges that accompany them. A slew of press releases within AlphaSense relay how businesses are focused on meeting rising demands and bypassing investor disruptions through flexible production, improving on-time customer order deliveries, and even protecting their supply chain software from cyber threats.
Cloud Industry Demand
According to Gartner, enterprise IT spending on public computing, within addressable market segments, will overtake spending on traditional IT in 2025. By 2025, 51% of IT spending will encompass the application software, infrastructure software, business process services and system infrastructure markets, up nearly 10% from 2022. And this tracks in the AlphaSense platform across a variety of content sources.
Broker research, in particular, points towards enterprise business as a major opportunity for both the IT services and software industries to invest in cloud-based technology. Many analysts are noting that an increasing number of businesses and individuals are prioritizing a transition to cloud solutions regarding strategic and budgetary importance within the next five years.
The interactive media and services industry is showing especially high demand signals, as they prioritize digital transformation and move to cloud-direct, multi-cloud native and modern application architectures.
As more cloud-native or refactored-to-cloud apps emerge, companies from differentiating industries will soon drive their popularity as certain workloads run better in different clouds. However, not all Enterprises will want to relocate their legacy applications to the cloud, though they want a unified network infrastructure for managing deployments across clouds, private data centers, and hybrid environments.
One thing is clear: those that choose to adopt Cloud platforms into their operations seem to be leading within their industries, at least according to Thomas Kurian, CEO of Google, in a recent company transcript:
“Google Cloud is accelerating the transformation of global leaders in every industry. Google Workspace today helps 8 million customers to transform the way they work, up from 6 million just two years ago. And we continue to be the top cloud for technology companies. Did you know that 70% of the top 100 unicorns in the world run on Google Cloud, including ShareChat in India, Tokopedia in Indonesia, SIP analytics in Africa, and DoorDash in the United States.”
Cloud computing technologies are a pivotal piece in the formation and implementation of the Metaverse. Read market commentary on how the cloud market plays into the future of the metaverse in our report, The Future of the Metaverse: An Analysis of the Leaders, Opportunities, and Threats.
Cloud Market Players
According to analyst research found within the AlphaSense platforms, hyperscalers like Amazon, Google, and Microsoft are becoming more invested in the enterprise solutions space. Already, they command a large market share of the data side due to these companies’ close and immediate linkage to cloud-hosting businesses.
Satya Nadella took over as CEO in 2014 and has since reinvented Microsoft into a cloud leader. So much so, it is now one of two public cloud providers that can deliver a wide variety of PaaS/IaaS solutions at scale. Additionally, Microsoft embraced the open-source movement and has largely transitioned from a traditional perpetual license model to a subscription model.
Public cloud is widely considered to be the future of enterprise computing, and Azure is a leading service for hybrid environments and, ultimately, public cloud environments. The company is also pushing its gaming business increasingly toward recurring revenues and residing in the cloud. We can be certain that customers will continue to drive the transition from on-premises to cloud solutions, and revenue growth will remain robust, with margins continuing to improve for the next several years.
In a recent Q2 2022 earnings call, Amazon saw a sequential drop in the quarter-over-quarter margins for its cloud-computing platform Amazon Web Services (AWS), with 35% for in Q1 versus 29% in Q2. And while these numbers might cause stakeholders to be concerned, tougher macroeconomic conditions are the primary reason for the fall, Brian T. Olsavsky, Senior VP & CFO of Amazon, suggests.
“The margin rate is going to fluctuate in this business,” he says. “It’s going to be always a factor of new investment and things like the sales force and new regions and infrastructure capacity, offset by infrastructure efficiency gains that we see, pricing issues as we extend contracts. But we did notice that it did help our cloud business at the time because, again, when you’re trying to launch a new product or service and you are faced with building your own data center and getting capital for a data center and building it yourself or moving to the cloud and essentially buying incremental infrastructure capacity, cloud computing really shows its value.”
According to broker research found on the AlphaSense platform, Google seems to be particularly focused on gaining a stronger foothold in the fast-growing public cloud market.
Google has used technological expertise to its advantage by creating and maintaining its private cloud platform, which has increased market share, driven additional revenue growth and created more operating leverage. And this move has certainly paid off, according to a Q2 2022 earnings call for the company. Google surpassed the $6 billion quarterly revenue mark for the first time, with the total Q2 revenue at $6.3 billion–with momentum growing across Google Cloud Platform and Workspace. The company continues to see its global customer base grow, with brands like Target in North America, H&M Group in Europe, Banco BV in Latin America and BioPharma in Asia buying into Google Cloud.
“Customers are choosing Google Cloud as their technology partner because of our leadership in four areas,” Sundar Pichai, CEO & Director of Google, says. “First, we continue to lead in the data cloud market because we unify data lakes, data warehouses, data governance and advanced machine learning into a single platform that can analyze data across any cloud. Second, companies like BetaBank and Mayo Clinic choose their open cloud infrastructure to modernize their IT systems on our cloud at the edge or in their data centers and help customers like Deutsche Telekom modernize its network, Third, cybersecurity. Google has always provided a secure cloud infrastructure, and we continue to introduce new cybersecurity products that help customers deduct, protect and respond to a broad range of cybersecurity threats.”
Conversations around the cloud computing market are abundant and gaining more traction by the day. While this level of growth in the cloud computing market is expected, there are still companies that are lagging behind. If the point wasn’t illustrated before, let it be stated again: those that choose to adopt Cloud platforms into their operations are leading the race within their respective industry.
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