As it has been the case throughout 2023, growth in the cloud in the third quarter was driven by the increasing utilization and potential of artificial intelligence applications.
The Big Three public cloud providers — Amazon, Microsoft, and Google — all reported their latest financial earnings this week. Microsoft and Google reported on Oct. 24, with Amazon reporting on Oct. 26.
Microsoft reported earnings from its first-quarter fiscal 2024, announcing that revenue from the company's Intelligent Cloud unit, which includes Azure, was $24.3 billion, a 19% year-over-year gain.
Alphabet, the parent company of Google, reported earnings for its third-quarter fiscal 2023, which included cloud revenue of $8.41 billion, a 22% gain.
Rounding out the Big Three, Amazon reported third-quarter fiscal 2023 cloud revenue of $23.1 billion, a 12% improvement over the same period in 2022.
"As an already massive cloud market keeps on growing, the year-on-year growth rate almost inevitably declines," John Dinsdale, chief analyst and managing director at Synergy Research, commented in a research note. "But we are now starting to see a stabilization of growth rates, as cloud provider investments in generative AI technology help to further boost enterprise spending on cloud services."
Google Cloud Growth Driven by AI Startups
During his company's earnings call, Alphabet CEO Sundar Pichai claimed that more than half of all funded generative AI startups are Google Cloud customers.
There are a number of reasons why AI workloads come to Google Cloud, according to Pichai. One reason is that Google offers advanced AI-optimized infrastructure to train and serve models at scale. Additionally, Pichai noted that Google offers more than 100 AI models, including popular third-party and open source models, as well as tools to quickly build search and conversation use cases.
"In fact, companies are increasingly using AI for the purpose of analyzing data," Pichai said. "Customers are choosing Google Cloud because we are the only large cloud provider with a unified platform to analyze structured and unstructured data."
Microsoft Boasts Growing Cloud Footprint
Microsoft's Azure cloud division is also growing thanks to new customer workloads related to artificial intelligence and machine learning.
According to Microsoft, its end-to-end AI platform on Azure is attracting organizations to migrate workloads to its cloud.
"Azure again took share as organizations bring their workloads to our cloud," Satya Nadella, CEO of Microsoft, said during his company's earnings call. "We have the most comprehensive cloud footprint, with more than 60 data center regions worldwide, as well as the best AI infrastructure for both training and inference."
Amazon Sees Uncertain Economy Impacting Cloud Deals
While Amazon Web Services (AWS) continues to grow its cloud capabilities, Amazon CEO Andy Jassy did have some words of caution.
"Companies have moved more slowly in an uncertain economy in 2023 to complete deals," Jassy said during his company's earnings call. "But we're seeing the pace and volume of closed deals pick up, and we're encouraged by the strong last couple of months of new deals signed."
Like his peers at Microsoft and Google, Jassy is extremely optimistic about the growth potential for AI services running in the cloud. Jassy noted that the number of companies building generative AI apps in AWS is substantial and growing very quickly. Amazon will have a lot to talk about the cloud at its annual AWS re:Invent conference that begins Nov. 27, he said.
"The team is excited to share a lot of new capabilities with customers and provide an array of opportunities for builders to learn and connect with one another," Jassy said.
About the authorSean Michael Kerner is an IT consultant, technology enthusiast and tinkerer. He consults to industry and media organizations on technology issues.