Cloud Computing Market Trends to Watch in 2024

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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 2024.

Related Reading: 10 Market-Moving Trends to Watch in 2024

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 AlphaSense 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.”

– Micron Technology | 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.

cloud computing market trends cagr growth
Based on research from Markets and Markets, the Cloud Computing market is expected to grow to be $1,266.4 billion by 2028 at CAGR of 15.1%.

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:

“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.”

– Google | Company Presentation

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 Spending Picking Up in 2024

Global spending on cloud infrastructure services surged by 19% year-over-year in the fourth quarter of 2023, reaching a total of $78.1 billion—a significant uptick of $12.3 billion. Throughout the entirety of 2023, total spending on cloud infrastructure services experienced an 18% growth, soaring to $290.4 billion from $247.1 billion in the previous year.

But what is causing this uptick in spending? The influence of enterprise IT optimization on the cloud services market is diminishing, as more customers are expanding their commitments with hyperscalers in anticipation of heightened consumption needs. 

Moreover, there is a noticeable resurgence in cloud migration efforts, paralleled by a sharp increase in new demand, particularly in the widespread adoption of AI applications. Hyperscalers are progressively ramping up their investments in generative AI, anticipating that its capabilities will unlock fresh opportunities in cloud consumption.

Investors are preoccupied with rising interest rates and macroeconomic events. Further, leadership from Amazon, Microsoft, and Alphabet report that customers are leaning their cloud spending. These realities raise the question: should investors be worried about these companies and their long-term potential?

Simply put: no. The cloud computing market has experienced major growth over the past year alone, and the worldwide public cloud services spending is forecasted to grow 20.4% to total $678.8 billion in 2024. Instead, we’re diving into earning calls to see where C-Suite Execs think things went wrong.  

“In Azure, customers continued to exercise some caution as optimization and new workload trends from the prior quarter continued as expected.”

– Microsoft | Q3 2023 Earnings Call

“[W]e saw some headwind from slower growth of consumption with customers really looking to optimize their costs given that macro climate.”

– Alphabet CFO Ruth Porat | The Motley Fool

Ultimately, customers want to “optimize their costs” by reducing spending, which consequently  slowed down cloud revenue growth across the tech giants. Amazon Web Services (AWS) saw 16% sales growth in the quarter, down from 37% growth in the year-ago quarter. Microsoft, for its part, said its Azure and other cloud services grew by 27%, down from 46% growth in the year-ago quarter. And Google’s cloud business sales slowed to 28% growth, a drop from 32% in the year-ago quarter.

While 2023 saw the tech sector lay off 262,735 employees, projections for future financial growth are optimistic. The public cloud market, which includes cloud infrastructure services like Amazon, Microsoft, and Google, is set to bring in $1.6 trillion in revenue by 2030—up from $524 billion last year. 

cloud computing market trends canalys estimates

“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 Yi Zhang, Analyst at Canalys. “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.”

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.

Microsoft (MSFT)

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.

Amazon (AMZN)

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 of 2022. 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…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.”

– Amazon | Q2 2022 Earnings Call

Google (GOOG)

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, as 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.“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.”

– Google | Q2 2022 Earnings Call

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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Tim Hafke
Tim Hafke
Content Marketing Specialist

Formerly a writer for publications and startups, Tim Hafke is a Content Marketing Specialist at AlphaSense. His prior experience includes developing content for healthcare companies serving marginalized communities.

Read all posts written by Tim Hafke