Cloud spending projected to grow 19% in 2025 following a strong 2024

Cloud infrastructure spending is expected to maintain its upward trajectory in 2025, with global investments forecasted to grow by 19%, according to a new report from Canalys. This follows a particularly strong 2024, which saw spending rise by 20% year-over-year in the fourth quarter, reaching $86 billion.

Cloud market surges on AI-driven demand

Total cloud infrastructure spending grew from $267.7 billion in 2023 to $321.3 billion in 2024, a 20% increase. The main driver behind this sustained growth has been the widespread adoption of artificial intelligence (AI) models, which have fueled cloud demand across industries. By the latter half of 2024, the leading cloud providers reported that AI applications had made a significant impact on their cloud business performance, according to Canalys.

“As AI market competition intensifies, cloud hyperscalers plan to further expand investments in cloud and AI infrastructure in 2025 to keep pace with rising demand,” the firm noted in its report.

Hyperscalers continue to dominate the cloud market

The competitive ranking of public cloud providers remained unchanged, with Amazon Web Services (AWS) leading the market, followed by Microsoft Azure and Google Cloud Platform (GCP). Together, these three cloud giants accounted for 64% of total cloud spending in 2024, with their combined spending growing by 25% year-over-year.

AWS maintained a steady 19% annual growth rate, while Microsoft and Google experienced slight declines in growth due to AI-driven demand outpacing supply. Despite this, all three hyperscalers are doubling down on investments in AI infrastructure, positioning themselves at the forefront of the generative AI race.

Cloud market rebounds after 2023 slowdown

The strong performance of 2024 signals a rebound from the cloud spending slowdown of 2023. Macroeconomic conditions had contributed to a dip in enterprise cloud investments that year, prompting concerns about the market’s trajectory. The ‘cloud slowdown’ of 2023, as described by the Uptime Institute, saw growth rates drop significantly from pandemic-era highs.

For instance, AWS reported a revenue increase of 27.5% in Q3 2022, down from a 33% rise in the previous quarter—the slowest growth rate in the company’s history at the time. However, 2024 marked a clear shift, with AI advancements driving renewed momentum in cloud investments.

Outlook for 2025: Strong growth ahead

Looking forward, Canalys’ 2025 projection of a 19% increase in cloud infrastructure spending reflects growing confidence in the sector. With enterprises doubling down on AI capabilities and hyperscalers expanding their cloud offerings, the market appears poised for another strong year.