Canalys: Global cloud service spending is expected to increase by 19% in 2025.

Canalys reports that in the fourth quarter of 2024, global spending on cloud infrastructure services increased by 20% year-on-year, reaching $86 billion. For the full year of 2024, cloud spending increased by 20% year-on-year, from $267.7 billion in 2023 to $321.3 billion in 2024. The rapid expansion of AI models has become the core driver of this growth, accelerating the popularity of cloud computing. By the second half of 2024, major cloud providers were reporting significant returns from AI investments, and the role of AI applications in driving overall cloud business was becoming increasingly prominent. As the competition in the AI market continues to heat up, cloud computing giants are increasing their investments in cloud and AI infrastructure to meet the growing demand. Canalys predicts that global spending on cloud infrastructure services will increase by another 19% in 2025. In the fourth quarter of 2024, the top three cloud service providersAmazon.com, Inc. Cloud Technologies (AWS), Microsoft Corporation Azure, and Alphabet Inc. Class C Cloudmaintained their market rankings unchanged, accounting for 64% of the global cloud spending market. Their total spending increased by 25% year-on-year. AWS, as the market leader, maintained a growth rate of 19% annually, staying consistent with the previous quarter. Meanwhile, the year-on-year growth rates of Microsoft Corporation Azure and Alphabet Inc. Class C Cloud slightly decreased compared to the previous quarter. The main reason was that the strong demand driven by AI exceeded supply capacity, leading to a shortage of computing resources, and cloud providers universally reported that the market supply-demand relationship was tightening. With AI technology constantly breaking through and widely applied, market demand is expected to grow exponentially. In order to seize the initiative, cloud computing giants are accelerating their global expansion, increasing investment in AI model training, deployment, and cloud-based AI applications. AWS's capital expenditure in the fourth quarter of 2024 reached $26.3 billion, with total spending expected to exceed $100 billion in 2025. Microsoft Corporation (MSFT.US) had capital expenditures of $22.6 billion during the same period, and plans to invest around $80 billion in expanding data centers throughout the fiscal year. Alphabet Inc. Class C (GOOGL.US) announced during its financial conference call that capital expenditures in 2025 are expected to reach $75 billion. "Cloud computing giants are ramping up their investments at an unprecedented pace." Canalys analyst Yi Zhang said, "Today's competition is no longer just about providing the most powerful AI services, but about how to ensure financial sustainability and long-term competitiveness while rapidly expanding." As the competition in AI intensifies, cloud computing giants are not only accelerating the development of in-house models but also quickly adapting to the impact of emerging AI innovators in the market. In January 2025, Chinese AI startup DeepSeek released the DeepSeek R1 model, which was hailed as an industry disruptor for its outstanding benchmark performance and high cost-effectiveness. DeepSeek R1 achieved near-GPT-4-level performance at extremely low cost, sparking discussions globally. Leading cloud service providers quickly responded by integrating DeepSeek R1 into their cloud platforms almost immediately to seize the market opportunity. "The rapid adoption of DeepSeek R1 by leading cloud providers highlights its disruptive impact, challenging industry standards with high cost-effectiveness," said Rachel Brindley, Senior Director at Canalys. "With the rapid evolution of AI technology, new models will continue to emerge, driving innovation and competition in the entire ecosystem. Cloud providers are also adjusting their strategies quickly to ensure customers can seamlessly access and integrate cutting-edge AI solutions." AWS continued to maintain its leading position in the global cloud market in the fourth quarter of 2024, with a market share of 33%, representing a 19% year-on-year growth. Annual revenue from cloud infrastructure exceeded $100 billion, continuing to lead the industry. At the AWS re:Invent conference in December 2024, AWS launched the new foundational model AWS Nova, which exclusively runs on Amazon Bedrock and offers three versions: Micro, Lite, and Pro. In January 2025, AWS further strengthened its AI ecosystem by announcing the integration of the latest DeepSeek R1 foundational model into Amazon Bedrock and Amazon SageMaker to meet the growing demand for high-performance AI models. Meanwhile, AWS accelerated infrastructure upgrades to accommodate the rapid development of AI and machine learning technologies, shortening the lifespan of some servers and network equipment from six to five years. AWS also continued to increase capital investments, recently announcing an investment of over $1 billion in Ohio and Georgia to build high-performance data centers focused on AI computing power. Microsoft Corporation Azure maintained its position as the second largest cloud service provider globally in the fourth quarter of 2024, with a market share of 20% and a year-on-year growth rate of 31%. Microsoft Corporation reported that 13% of Azure's growth came from AI services, with the AI services themselves experiencing a staggering 157% year-on-year growth, becoming a key driver of Azure's business growth. In December 2024, Azure announced the integration of OpenAI's latest model GPT-01 into Azure OpenAI Service. GPT-01 features multimodal design, supporting text and visual inputs. In January 2025, DeepSeek R1 officially landed on Azure AI Foundry and was included in the GitHub model directory, becoming part of Microsoft Corporation's vast AI ecosystem.This ecosystem now covers over 1800 AI models. In addition to deepening the layout of AI, Microsoft Corporation is also accelerating infrastructure expansion globally. In December 2024, the company announced the completion of the construction of three major Azure availability zones in Saudi Arabia, expected to be operational by 2026. In February 2025, Microsoft Corporation further increased its investment in the European market, announcing plans to invest approximately $700 million by June 2026 to expand Poland's large-scale cloud computing and AI infrastructure to meet the growing demand for computing power.Alphabet Inc. Class C is the third largest cloud service provider in the world, with a market share of 11%, a year-on-year growth of 32%. As of December 31, 2024, its revenue has surged to $93.2 billion, further increasing from the previous quarter's $86.8 billion. Additionally, the number of customers signing cloud service commitments for the first time in 2024 has doubled compared to 2023, indicating strong market demand. In the field of AI, Alphabet Inc. Class C continues to increase its investment. In December 2024, the company released its most advanced multimodal AI model Gemini 2.0, fully based on TPU computing. Two months later, the Gemini 2.0 series (including Gemini 2.0, Flash, Flash-Lite, and Pro) officially launched, fully integrated into the Gemini API, accessible to users through Google AI Studio and Vertex AI. At the same time, Alphabet Inc. Class C accelerates its global infrastructure expansion. In December 2024, the company announced the establishment of its 41st cloud region in Mexico, the third cloud region in Latin America following Chile and Brazil, further consolidating its market influence in the region.