IaaS Public Cloud Services Revenue Grew 16.2 Percent in 2023

The worldwide infrastructure as a service (IaaS) market grew 16.2% in 2023, to total $140 billion, up from $120 billion in 2022, according to Gartner. Amazon retained the No. 1 position, followed by Microsoft, Google, Alibaba, and Huawei.

“Cloud technologies continue to be a major business disruptor, due in part to the focus on hyperscalers looking to support offerings related to sovereignty, ethics, privacy, and sustainability,” said Sid Nag, VP Analyst at Gartner. “This should continue to drive exponential growth into the future with these offerings being spurred by generative AI investments for 2024 and beyond.”

In 2023, the top five IaaS providers accounted for 82% of the market. Amazon continued to lead the worldwide IaaS market with revenue of $54.6 billion and a 39% market share, followed by Microsoft with a 23% market share. With a growth of 26.3% in 2023, Google moved into the third position at 8.2% market share. Alibaba secured the fourth spot with 7.9% of the market.

“As the top hyperscalers continue to grow their IaaS offerings in the shadow of GenAI, we should also see other areas, such as software-as-a-service (SaaS) and platform-as-a-service (PaaS), grow as well. IaaS is the tide that lifts all boats,” said Nag. GenAI is beginning to have an impact on the growth of cloud markets, although AI-driven growth in 2023 was small.

“Cloud is the foundational and scalable substrate required to make GenAI a reality. The segments that are beginning to see the impacts of GenAI include IaaS, where AI model training is consuming IaaS resources, and SaaS where GenAI capabilities are beginning to be included in SaaS applications,” said Nag. “Capacity demand in public cloud markets has already increased sharply as a result and will continue to do so through 2028. In the near term, AI-driven revenue growth will be small relative to the overall public cloud market.”