The worldwide infrastructure as a service (IaaS) market increased by 16.2% in 2023 to reach $140 billion, up from $120 billion in 2022, according to research and consulting firm Gartner. This growth illustrates the expanding reliance on cloud technologies across various industries.
Amazon retained its leading position in the IaaS market in 2023, followed by Microsoft, Google, Alibaba, and Huawei. Amazon reported revenue of $54.6 billion, securing 39% of the market share. Microsoft held a 23% market share, while Google’s growth of 26.3% allowed it to capture 8.2% of the market, moving into the third position. Alibaba followed closely with a 7.9% share.
“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 (GenAI) investments for 2024 and beyond.”
In 2023, the top five IaaS providers accounted for 82% of the market, reflecting the dominance of major players. Nag highlighted that as the leading hyperscalers expand their IaaS offerings, related areas such as software-as-a-service (SaaS) and platform-as-a-service (PaaS) are expected to grow as well.
Capacity demand
“IaaS is the tide that lifts all boats,” he added.
GenAI is beginning to influence the growth of cloud markets, although its impact in 2023 was relatively modest,” Nag said.
He further explained that “cloud is the foundational and scalable substrate required to make GenAI a reality.” Nag noted that segments like IaaS, where AI model training consumes resources, and SaaS, where GenAI capabilities are being integrated, are starting to feel the effects of AI.
Capacity demand in public cloud markets has already increased significantly due to these trends and is expected to continue growing through 2028. In the near term, AI-driven revenue growth will remain small compared to the overall public cloud market.
This growth trajectory indicates a robust future for the IaaS market and the broader cloud industry as generative AI and other advanced technologies continue to evolve and drive demand.