Dive Brief:
- The global cloud services market is expected to surpass $800 billion this year and double in size by 2028, according to a Monday IDC report. Cloud spend totaled $669 billion globally last year, according to the tech market research firm.
- While IDC anticipates market growth rates to cool slightly over the next several years, spending across infrastructure, platform and application services is expected to maintain a 19.4% compound annual growth rate through 2028, spurred in part by enterprise consumption of AI technologies.
- “The growing interdependence between AI innovation and cloud infrastructure is positioning cloud services as the backbone of AI development and deployment,” Andrea Minonne, data and analytics research manager at IDC, said in the report. “AI platforms will be the fastest growing technology in the years to come.”
Dive Insight:
Generative AI earned a starring role in the cloud adoption story last year, as AWS, Microsoft and Google raced to stand up large language model marketplaces and build out data center capacity in anticipation of high-intensity enterprise workloads.
With enterprise leaders pushing for cloud to drive modernization, migrations regained momentum. Hyperscalers also reaped early rewards from billions in AI investments, according to IDC.
“Rapid advancements in artificial intelligence are significantly driving the surge in cloud spending,” Minonne said.
IDC’s forecast for cloud platform services reflects AI’s emerging impact on the broader market. The category, which includes data management software and AI platform solutions, is expected to experience a massive and prolonged growth spurt over a five-year period inclusive of 2024, sustaining a compound annual growth rate above 50%.
PaaS is expected to comprise one-fifth of total cloud spend this year, as will infrastructure services, or IaaS. Software application services — SaaS — will remain cloud’s largest category, consuming two-fifths of enterprise cloud spend.
AI has already had a profound impact on cloud, reshaping enterprise consumption patterns and driving up hyperscaler capital expenditures. At the same time, cloud is helping to define the trajectory of AI as it moves from the training ground up into the enterprise tech stack.
“The cloud model remains incredibly well positioned to serve customer needs for innovation in application development and deployment, including as data, artificial intelligence/machine learning and edge needs continue to define the forefront of innovation,” Eileen Smith, data and analytics group VP at IDC, said in the report.
