Key takeaways
- The global cloud market exhibited robust growth in Q2- 2024, with AWS, Microsoft, Google, and Oracle collectively generating USD 67.1 billion in revenue. This represents a substantial year-over-year (YoY) increase of 20.8%, the second highest quarterly YoY growth rate in the past six quarters.
- Cloud revenue now accounts for highest revenue contribution for these companies overall top line averaging at 21.5% in Q2-2024 – the highest in past ten quarters.
- While AWS continues to expand, its growth rate has moderated relative to Microsoft Intelligent Cloud (MIC), Google Cloud, and Oracle Cloud, which have demonstrated accelerated growth fuelled by AI advancements. It is crucial to note that Microsoft and Google’s revenue figures encompass more than cloud infrastructure services.
- AWS achieved a YoY growth rate of 18.7% in Q2-2024, reaching USD 26.3 billion, driven by infrastructure modernization contracts and the escalating demand for its AI solutions.
- Microsoft’s Intelligent Cloud segment (MIC) MIC revenue reached a record USD 28.5 billion, growing 18.8% YoY in Q2-2024, driven by strong demand for consumption-based offerings, including Azure and other cloud services.
- Google Cloud delivered its highest revenue and profitability ever in Q2-2024, with USD 10.3 billion in revenue (28.8% YoY growth) and ~ USD 1.2 in operating income. Growth was driven by Google Cloud Platform (GCP) followed by Google Workspace.
- Oracle Cloud Infrastructure (OCI) experienced exceptional YoY growth of approximately 43%, reaching ~USD 2 billion in revenue for Q2-2024. Surge in cloud infrastructure contracts during Oracle’s Q3 and Q4 fiscal quarters, driven by large AI training workloads on the Oracle Cloud, fuelled this growth.
Key trends
Artificial intelligence (AI) emerges as the new Gold Rush for Cloud leaders
Artificial intelligence is rapidly transitioning from a technological breakthrough to a primary revenue driver for cloud giants like Oracle, AWS, Microsoft, and Google. These industry leaders are making substantial investments in AI research, development, and infrastructure, positioning themselves as essential collaborators for organizations across all industries.
The burgeoning demand for AI-driven cloud solutions is fuelling exponential revenue growth, highlighting AI’s pivotal role in shaping the cloud computing landscape. Businesses are increasingly adopting cloud services to deploy generative AI models, exemplified by technologies like OpenAI’s ChatGPT chatbot.
Stellar performance by Google and Oracle as cloud revenue peaks
Google Cloud reached a major milestone in Q2-2024 by exceeding USD 10 billion revenue mark for the first time. With a revenue of USD 10.3 billion, the cloud division has been Google’s main growth driver for an impressive 22 consecutive quarters. Q2-2024 represents its highest revenue contribution and its most profitable quarter to date, cementing its status leading player in cloud computing market.
Oracle’s cloud ambitions also gained significant traction. Oracle Cloud Infrastructure (OCI) revenue surged to ~USD 2 billion, contributing a substantial 14% to the company’s overall top line. This represents OCI’s highest contribution since 2021, signalling a robust resurgence in Oracle’s cloud business.
Oracle’s strong disruptive cloud ascent continues
Oracle has emerged as a formidable disruptor in the cloud landscape, challenging the dominance of the original hyperscalers: AWS, Microsoft, and Google.
The company has consistently outpaced the industry with an impressive 43% YoY IaaS growth in Q2-2024, marking eight consecutive quarters of leading cloud revenue growth.
Exhibit 1: Revenue growth rate (YoY) of Cloud service providers, Q2-2024
Exhibit 2: Revenue trends and growth of Cloud service providers, Q2-2024
Cloud Infrastructure providers
A. Amazon Web Services (AWS)
Overview
- In Q2-2024, AWS generated revenues of USD 26.3 billion (17.8% of total revenue) to achieve a 18.7% YoY (year-over-year) increase. This growth is attributed to:
- Increased customer demand for infrastructure modernization services
- Surge in adoption of AWS AI offerings
- Correspondingly, AWS’ net profit surged by approximately 74% YoY to reach USD 9.3 billion in Q2-2024, contributing 6.3% to overall revenue.
- This significant profit margin expansion was driven by higher sales growth rate, decline in operating expenses declined owing to lower payroll and related expenses, and a reduction in depreciation and amortization expenses changes for the estimated useful lives of its servers.
- Amazon announced a substantial increase in Capex for 2024, with significant allocation to acquire Nvidia GPUs for training and operating generative AI models.
- Capex is estimated to grow in H2-2024, to accommodate the expanding demand for AWS infrastructure, driven by generative and non-generative AI workloads.
- Furthermore, AWS’ commitment of over USD 100 billion in AI investments over the next decade reinforces its dedication to AI leadership and positions the company to effectively meet the burgeoning requirements of the AI landscape.
- AWS has achieved an annualized revenue run rate surpassing USD 105 billion. This growth trajectory is underpinned by enterprises’ strategic shift towards cloud-based operations, including the migration of on-premises workloads, the initiation of new cloud initiatives, and the leveraging of generative AI capabilities.
- In a key leadership transition, Matt Garman has succeeded the role of CEO of AWS, succeeding Adam Selipsky who departed in June 2024.
AWS global footprint
- AWS Cloud has 105 Availability Zones across 33 geographic regions globally.
- Announced plans for 21 more Availability Zones and 7 more AWS Regions in Malaysia, Mexico, New Zealand, the Kingdom of Saudi Arabia, Thailand, and the AWS European Sovereign Cloud.
- AWS Local Zones are available in 17 US metropolitan areas and 17 outside the US, with a new Local Zone in Honolulu, Hawaii.
- Amazon CloudFront Points of Presence (PoPs) are situated within the AWS network and peer with internet service provider (ISP) networks. It has 600+ CloudFront POPs in 100+ cities across 50+ countries.
- CloudFront embedded PoPs are situated within ISP networks, closest to end viewers. It has 600+ embedded POPs across 200+ cities in North America, Europe, and Asia.
Exhibit 3: AWS Cloud global capabilities
Exhibit 4: AWS Cloud – Key launches and announcements
- AWS is aggressively expanding its global cloud infrastructure with significant investments in Spain, Italy, Germany, and Singapore. The company is also bolstering its AI capabilities and opening new data centres to meet growing customer demand and strengthen its market position.
- In a move to address the burgeoning demands of Artificial Intelligence (AI), AWS has announced a planned investment of over USD 100 billion over the next decade. This commitment underscores its dedication to fostering advancements in the field of AI.
Exhibit 5: AWS Cloud – Key product initiatives
During Q2-2024, AWS introduced Deadline Cloud for media and entertainment industry, expands VPC support for CloudShell, and invested USD 230 million in cloud credits to boost generative AI innovation globally, with a focus on India.
Exhibit 6: AWS Cloud – Key partnerships
AWS significantly expanded its ecosystem through strategic partnerships in Q2-2024. Key highlights include deepened collaborations with SAS Institute, Cloud Assembly, Hugging Face, CrowdStrike, and Mavenir.
Additionally, AWS has formed new alliances with NEORIS, Noventiq, Orange MEA, Chronicle Software, Denodo, and Freshworks, while expanding its footprint in regions like Australia, China, and the Middle East.
These partnerships focus on accelerating cloud adoption, driving AI innovation, and enhancing security and operational efficiency for enterprises.
Exhibit 7: AWS Cloud – Key contract wins
Telenor Group invested in sovereign cloud expansion with AWS and Skygard, migrating workloads to AWS. Nextech3D.ai partnered with AWS to leverage technologies for data-driven business decisions and enhanced service offerings.
B. Microsoft Intelligent Cloud (MIC)
Overview
- Microsoft reported a 15.2% year-over-year (YoY) revenue increase in Q2-2024, reaching USD 64.7 billion, with AI advancements, particularly within the cloud segment, driving this growth.
- Microsoft’s Intelligent Cloud (MIC) segment, encompassing server products and cloud services, contributed 44.1% to total Q2-2024 revenue, up from 42.7% in Q2- 2023.
- MIC revenue reached a record USD 28.5 billion, growing 18.8% YoY, surpassing the previous quarter’s (Q2-2023) 15.3% growth. Strong demand for consumption-based offerings, including Azure and other cloud services, fuelled this surge.
- Server products and cloud services revenue increased 21% (17.8 billion) in Q2- 2024. Azure and other cloud services led this growth, expanding approximately 29%, with AI services contributing eight percentage points.
- Microsoft forecasts stable MIC revenue for Q3-2024 between USD 28.6 billion – USD 28.9 billion. Azure and other cloud services are projected to grow 28%-29% in constant currency. AI growth is expected to outpace Azure growth, driven by infrastructure investments and demand.
- Microsoft’s integration of OpenAI AI technology across its products has significantly impacted growth. The company reported over 60,000 Azure AI customers in Q2- 2024, a 60% year-over-year increase, including average spend per customer.
Microsoft Cloud global footprint
MIC has a presence across 60+ regions, and its Azure infrastructure comprises 300+ physical data centres.
Exhibit 8: Microsoft Cloud global capabilities
Exhibit 9: Microsoft Cloud – Key launches and announcements
Microsoft is aggressively expanding its global data centre footprint with significant investments in the US, Europe, Asia, and Africa. Key focus areas include AI infrastructure development, cloud expansion, and economic stimulus. Notable projects include a massive joint venture with OpenAI, data centre openings in Mexico and Spain, and substantial investments in India, Malaysia, and Sweden.
Exhibit 10: Microsoft Cloud – Key partnerships
Microsoft collaborates with various partners, including Cloud Software Group, CCL, KT, and Al Moammar Information Systems, to expand cloud and AI offerings, while also establishing industry standards and enhancing cloud infrastructure capabilities.
Exhibit 11: Microsoft Cloud – Key contract wins
Xerox partnered with TCS to migrate legacy data centre workloads to Azure, enhancing operational efficiency and scalability.
C. Google Cloud
Overview
- Google Cloud segment revenue surpassed the USD 10 billion mark reaching USD 10.3 billion in Q2-2024, registering a growth rate of 28.8% YoY. This growth was driven by Google Cloud Platform (GCP) followed by Google Workspace, with infrastru“cture and platform services being the leading contributors within the GCP segment.
- GCP revenue growth outpaced the growth in overall Cloud revenue fueled by increasing contribution from AI. Google Workspace revenue growth was primarily led by an increase in average revenue per seat.
- Cloud revenue contribution to overall revenue reached 12.2% in Q2-2024, up from 10.8% in Q2-2024. The Cloud revenue contribution now accounts for the highest proportion of revenue over the last 22 quarters (from Q1-2019 onwards).
- Google Cloud reported its highest cloud revenue and profitability in Q2-2024, with an operating income of ~USD 1.2 billion (as compared to USD 395 million in Q2-2023).
- Operating income accounted for ~11.3% of the overall Google Cloud revenue in Q2-2024, as compared to 4.9% in Q2-2023.
- Google’ AI infrastructure and generative AI solutions for cloud customers continue to be significant revenue generators and are being leveraged by more than 2 million developers.
- Google’s continued investment in AI and increased proliferation among enterprises continue to drive revenue growth.
Google Cloud global footprint
Google currently operates in 40 regions with 121 Zones across 200+ countries.
Plans to operate in new regions, including Austria, Greece, Malaysia, Mexico, New Zealand, Norway, Sweden and Thailand.
Exhibit 12: Google Cloud global capabilities
Exhibit 13: Google Cloud – Key launches and announcements
Google significantly expanded its global cloud infrastructure with substantial investments in new and existing data centres across the US, Europe, and Asia. This expansion, coupled with strategic partnerships, aims to bolster cloud services, AI capabilities, and sustainability initiatives while capturing new markets.
Exhibit 14: Google Cloud – Key product initiatives
Google Cloud’s Vertex AI enhances generative AI model accuracy by introducing features like dynamic retrieval, high-fidelity mode, and third-party data integration.
Exhibit 15: Google Cloud – Key partnerships
Google Cloud has forged numerous strategic partnerships in Q2-2023, to bolster its AI and cloud offerings. Collaborations span industries, encompassing technology providers, enterprises, and governments. Key focus areas include generative AI, cybersecurity, data analytics, and infrastructure expansion. These partnerships aim to accelerate digital transformation, drive innovation, and deliver enhanced solutions to customers globally.
Exhibit 16: Google Cloud – Key contract wins
Zambian Government and Google Cloud partner to establish a Centre of Excellence, driving digital transformation through skill development and knowledge sharing.
D. Oracle Cloud
Overview
- Oracle Cloud Infrastructure (OCI-IaaS) offering, experienced remarkable year-over-year growth in Q2-2024. Revenue surged by approximately 43%, reaching a record-breaking USD 2 billion.
- This impressive momentum has positioned OCI as a more significant contributor to Oracle’s overall revenue stream, reaching its highest point since 2021 at 14% in Q2-2024, a significant increase from 10.1% in the same quarter of the previous year.
- Surge in cloud infrastructure contracts during Oracle’s Q3 and Q4 fiscal quarters, driven by large AI training workloads on the Oracle Cloud, fuelled this growth. High demand for training large language models resulted in a significant 44% increase in Remaining Performance Obligations (RPOs) to USD 98 billion.
- Looking deeper into the infrastructure cloud services segment, revenue grew by a substantial 42%. Excluding legacy hosting services, OCI Gen 2, the next-generation infrastructure platform, witnessed an even more impressive 44% growth, reaching an annualized revenue of USD 7.4 billion. Additionally, OCI consumption revenue climbed by a notable 53%.
- Oracle’s management team anticipates that the ever-increasing demand for processing heavy AI workloads will continue to propel sales and RPOs even higher, potentially leading to double-digit revenue growth in fiscal year 2025.
- Further bolstering its cloud infrastructure and AI capabilities, Oracle secured over 30 AI sales contracts exceeding a cumulative value of USD 12.5 billion in Q4-2024 and a staggering USD 17 billion for the entire fiscal year. This includes a noteworthy partnership with OpenAI to leverage Oracle Cloud Infrastructure for running deep learning and AI workloads.
- Significantly expanding its cloud ecosystem, Oracle established a multi-cloud partnership with Google, offering a direct network interconnect between OCI and Google Cloud in ten regions, effective immediately.
- It also plans to enable direct access to Oracle Database services running on OCI, deployed within Google Cloud data centres, starting from September 2024. This move mirrors a similar partnership established with Microsoft in December 2023.
- Demonstrating commitment to global expansion, Oracle announced strategic investments in key geographies like Japan, Morocco, and Spain, to further solidifying its position as a leading player in the cloud infrastructure and AI services landscape.
Oracle Cloud global footprint
Oracle offers 100+ cloud services across 49 Public cloud regions across 24 countries.
Offers dedicated EU Sovereign Cloud regions and distinct government clouds for the US, UK, and Australia to address regional data residency regulations.
Isolated cloud regions cater to US national security requirements.
Exhibit 17: Oracle Cloud global capabilities
Exhibit 18: Oracle Cloud – Key launches and announcements
Oracle invests USD 8 billion in Japan to expand cloud and AI services, while opening new cloud regions in Morocco and Spain, catering to growing cloud demands and facilitating workload migrations for various sectors.
Exhibit 19: Oracle Cloud – Key product initiatives
Oracle enhanced its AI capabilities with AI-powered Oracle Fusion Cloud CX, NVIDIA AI Enterprise on Oracle Cloud Infrastructure Supercluster, and Database 23ai, accelerating sales, bolstering government AI initiatives, and simplifying AI integration for businesses.
Exhibit 20: Oracle Cloud – Key partnerships
Oracle has formed strategic partnerships with Palantir, LinkDaddy, OpenAI, Microsoft, and Google Cloud to bolster its cloud and AI offerings, empowering businesses and governments with advanced solutions, expanding online presence for small businesses, and enhancing AI capabilities.
Exhibit 21: Oracle Cloud – Key contract wins
Oracle expands its cloud footprint through partnerships with TIM Italy, Digital Realty, and BDCCL, while securing cloud migration projects with Panasonic Information System and Du, demonstrating strong market penetration and diverse customer base.
Research methodology and assumptions
- The “Cloud Stories – Summer 2024” report provides brief financial insights of the leading 4 cloud infrastructure providers (AWS, Microsoft Intelligent Cloud, Google Cloud and Oracle Cloud). The report also provides information related to product initiatives, partnerships, and contract wins for the period April- June 2024.
- The report primarily leverages company websites and publicly disclosed information from major cloud service providers.
- The report analyses aggregate performance and future plans of leading providers and is used to project potential demand trends, wherever applicable.
- The report aligns Oracle’s fiscal year with the calendar year by considering Q4-FY2024 equivalent to Q2-CY2024.
- Oracle Cloud revenue reporting (IaaS + SaaS) has been realigned from Q1-2023 onward and now tracks only Oracle Infrastructure Cloud (IaaS) revenue.
- Previous quarter figures may differ slightly from prior reports due to the focus on Microsoft Intelligent Cloud (MIC), which encompasses Azure and related services.
- Specifically for Google, the revenue numbers are for Google Cloud, encompassing various services like Workspace, Google Cloud Platform, data & analytics platforms, infrastructure, and collaboration tools. It’s important to note that Google doesn’t report GCP revenue separately but as part of the broader Google Cloud segment.